Circle, the issuer of the dollar-pegged stablecoin USDC, has submitted recommendations to the European Commission regarding the review of the Markets in Crypto Assets (MiCA) regulation. The company's proposals aim to secure less stringent compliance rules for foreign stablecoins and alter existing reserve requirements.
According to Circle, out of the 25 largest stablecoins by market capitalization, only three are regulated under MiCA, and two of those—USDC and EURC—are issued by Circle. Patrick Hansen, Director of EU Strategy & Policy at Circle, warned that failing to maintain a flexible multi-issuance model could incentivize users to shift to offshore exchanges that lack MiCA protections.
Proposed Foreign Stablecoin Regime
To address current regulatory gaps, Circle proposed a recognition regime for foreign stablecoin issuers. Under this system, international issuers would be primarily supervised in their home jurisdictions with measures equivalent to those in the EU. Locally licensed institutions would then handle distribution within the bloc, under recognition from involved parties and the European Banking Authority. The proposal would also permit Euro-based stablecoins to circulate in foreign jurisdictions under a similar framework.
Objections to Bank Deposit Mandates
Circle also challenged current capital requirements for e-money token issuers, which require institutions to hold 30% of their reserve assets in commercial banks, increasing to 60% for significant e-money tokens.
The company stated that these mandatory minimum deposit requirements increase exposure to the credit and counterparty risks of the banking sector. Circle called for the rule to be reconsidered and replaced with a less rigid minimum asset liquidity requirement, aligning with views expressed by the European Central Bank.
Following the conclusion of the feedback period for the regulatory review, diplomatic sources have indicated that the EU is considering adjustments to its stablecoin rules to align with recent international regulatory developments, such as the passage of the GENIUS Act in the United States.
