Circle Proposes Changes to EU Stablecoin Reserve Rules in MiCA Review

Circle, the issuer of the USDC and EURC stablecoins, has formally requested the European Commission to reconsider its reserve requirements for stablecoin issuers as part of the ongoing review of the Markets in Crypto-Assets regulation (MiCA). In a response submitted around October 1, 2026, Circle advocates for the replacement of mandatory bank-deposit minimums with more flexible liquidity-based reserve rules, arguing that the current framework could inadvertently increase risks for the banking sector.

Under the existing regulations, issuers of electronic money tokens (EMTs) are required to hold at least 30% of their reserves in commercial bank deposits, with that figure rising to 60% for significant tokens. Circle contends that this rigid requirement could lead to a situation where a surge in redemptions results in substantial withdrawals from banks, potentially destabilizing the financial institutions involved. Instead, Circle proposes that reserve assessments be based on the liquidity of assets, allowing for a more dynamic approach to managing redemptions.

Additionally, Circle is advocating for the inclusion of cross-border stablecoin issuance, which would enable the same token to be issued by entities in different jurisdictions while maintaining its status as a single interchangeable asset. This proposal is supported by the European Central Bank and the European System of Central Banks, which have also suggested moving towards liquidity-based metrics instead of fixed deposit requirements. Circle emphasizes that creating an equivalence regime for foreign issuers could help mitigate the risk of stablecoin activities shifting outside the EU framework due to overly burdensome compliance measures.

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Source: KLEA News