Circle Pushes MiCA Overhaul as Just 3 of Top 30 Stablecoins Meet EU Rules

Circle is urging European officials to amend several aspects of the Markets in Crypto-Assets Regulation for stablecoins. An Oct. 1 comment letter from Circle to the European Commission noted that many of the largest stablecoins by market value are not currently subject to the regulation. 

Circle proposed multiple amendments related to cross-border stablecoin offerings and other reserved assets and stablecoins regulated outside Europe.

Patrick Hansen, director of EU strategy and policy at Circle, said only three of the 30 most popular stablecoins meet MiCA requirements: USDC, USDG, and EURC. There are about 30 e-money tokens approved in Europe, though other major stablecoins do not meet MiCA requirements.

Circle Pushes to Preserve Cross-Border Stablecoin Issuance

A key concern is issuers operating in multiple jurisdictions. Circle seeks to prevent regulations restricting European issuers from issuing a stablecoin in partnership with other issuers around the world. This could lead to European stablecoin users turning to foreign competitors instead of regulated European companies.

Circle also suggested ways to recognize stablecoins issued and regulated by other countries. These approaches would allow stablecoin issuers to be largely regulated in their home countries but distribute stablecoins in Europe through European-regulated entities. The Commission would review other countries’ regulatory systems as part of the EBA’s evaluation of the stablecoin issuer.

The company mentioned the US GENIUS Act as a possible source. The provisions of the GENIUS Act include requirements that similar laws and regulations, registration, reserve, and other supervisory provisions apply to eligible foreign issuers.

Read More: What MiCA Still Doesn’t Solve — Europe’s Biggest Crypto Regulation Problems

Circle has grown its presence in Europe with the introduction of MiCA. EURC issuance reached over €400 million in August, more than doubling over the previous year. EURC is issued by Circle through a regulated French electronic money institution. EURC reserves are kept separate from Circle’s other assets and audited monthly by third parties.

MiCA Reserve Rules Face Calls for Greater Flexibility

Circle also urges policymakers to review MiCA rules requiring e-money token issuers to maintain at least 30% of reserves in bank deposits and 60% of reserves in bank deposits for significant tokens. Circle says required bank deposits expose e-money token issuers to risks related to banks as counterparties.

In contrast, Circle allows reserve requirements related to redemptions. European central banks have expressed support for changing deposit limits while maintaining other reserve requirements.

The issuer also opposed two concentration measures adopted by the EBA: a 35% limit on exposure to a given sovereign borrower and a limit on the amount of deposits that can be placed with individual banking counterparties of 1.5% of the banking counterparty’s assets.

Circle argues that the first measure would limit a dollar stablecoin issuer’s ability to use government-backed assets, and the second measure would require major dollar stablecoin issuers to hold reserves with many different banks, making operations more complicated.

Read More: Circle Launches Arc Mainnet With BlackRock, Visa and Mastercard as Validators

Circle’s suggestions are related to the MiCA assessment process and do not constitute new EU legislation. Circle wants policymakers to maintain cross-border issuance of stablecoins and other tokens and to update reserve requirements to be more flexible and liquidity-oriented, and establish a framework to allow non-EU stablecoins to be issued in the EU after obtaining regulatory approval.

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