Circle and Tether have found common ground in opposing provisions of the European Union's Markets in Crypto-Assets Regulation (MiCA), specifically targeting requirements that constrain how stablecoin issuers manage their reserves.
Circle, the issuer of USDC, is urging the European Commission to modify MiCA's reserve rules and create a recognition regime for foreign-regulated stablecoins. The company proposes that the European Commission first determine whether a foreign jurisdiction's regulatory standards are equivalent to EU requirements, after which the European Banking Authority would recognize individual issuers. These foreign issuers would remain primarily supervised in their home countries while distributing tokens through locally licensed institutions.
Both Circle and Tether object to a requirement that e-money token issuers maintain at least 30% of reserves in commercial bank deposits, rising to 60% for tokens classified as significant. Circle wants this rule replaced with a broader liquidity standard, arguing that mandatory bank deposits increase issuers' exposure to bank credit and counterparty risk.
Tether Chief Executive Officer Paolo Ardoino has made similar arguments, warning that forcing large stablecoin issuers to concentrate reserves in banks could create systemic vulnerabilities if financial institutions failed or could not meet large withdrawals. Ardoino stated last month that Tether declined to seek an EU license because of this requirement.
Circle additionally seeks removal of a 35% cap on exposure to a single sovereign and a rule limiting deposits with an individual bank to 1.5% of that lender's total assets. The company argues these restrictions prevent dollar stablecoins from relying on high-quality sovereign securities and force large issuers to spread reserves across dozens of banks.
Circle also proposes that MiCA preserve multi-issuance structures, where a European entity co-issues a globally circulating stablecoin with a foreign-regulated counterpart. The company contends that restricting this structure could push European users toward offshore platforms outside MiCA's protections.
Currently, only three of the world's 25 largest stablecoins by market value—USDC, USDG, and EURC—are regulated under MiCA, despite roughly 30 e-money tokens securing authorization since the framework took effect.
The European Banking Authority has taken a different stance, urging the Commission last month to strengthen MiCA against risks arising from third-country multi-issuer stablecoin structures. The EBA warned that reserves, redemptions, and other critical functions can sit beyond effective EU supervision.
The Commission's MiCA review consultation closed on September 30, and its findings could lead to legislative amendments. Circle's proposals offer no immediate path into Europe; foreign issuers remain subject to the existing framework while Brussels determines whether opening MiCA to more global liquidity justifies loosening current barriers.
