Circle Wants EU to Loosen Stablecoin Bank Deposit Rules

Circle has asked the EU to replace MiCA’s mandatory bank deposit requirement for e-money tokens with a less rigid liquidity rule. For holders, the change could affect how issuers manage USDC, EURC and other stablecoins sold in Europe, though Circle has not published a token-level reserve comparison.

The proposal matters because MiCA currently requires issuers to keep at least 30% of their reserve assets in commercial bank deposits. The minimum rises to 60% for an e-money token classified as significant.

Circle says those limits concentrate reserves in the banking system. In its response to the European Commission’s MiCA review consultation, the USDC and EURC issuer wrote:

This mandatory minimum deposit requirement should be reconsidered and replaced with a less rigid minimum asset liquidity requirement under MiCA.

That is Circle’s position, not an enacted EU rule. The Commission has not adopted the change on the evidence provided, and the brief does not include a consultation deadline.

What Circle Wants Changed

Circle is seeking changes beyond the bank deposit minimum. It wants the EU to remove the EBA Level 2 cap limiting a reserve’s exposure to a single sovereign issuer to 35%.

Circle argues that the cap makes it impossible for issuers of non-euro tokens to hold primarily high-quality liquid sovereign assets. It is especially relevant to USDC because Circle describes USD-denominated tokens as non-EU currency issuers. The submission does not provide reserve-composition figures showing how much USDC would hold under the proposed rules.

The company also wants the EU to remove a separate limit of 1.5% of a bank’s total assets for each banking counterparty. Circle says larger issuers would otherwise need reserve relationships with dozens of banks, increasing operational complexity and risk.

The claimed effects on bank exposure remain an argument from the issuer. The brief does not contain the EBA standards themselves, so it does not establish how the limits were derived or how each would affect USDC and EURC in practice.

USDC, EURC and USDT

Circle says it issues the largest dollar-denominated and euro-denominated e-money tokens authorised under MiCA, which are USDC and EURC. Roughly 30 e-money tokens are authorised, but only USDC, USDG and EURC appear among the 25 largest stablecoins globally by market capitalisation, according to Circle.

That leaves the treatment of many widely used tokens unresolved in the material reviewed. Circle’s submission does not state whether USDT has applied for or received MiCA authorisation. A proposed change to reserve rules would not by itself establish a token’s authorisation status.

The submission also does not set out redemption volumes or detailed redemption terms for USDC, EURC or USDT. Those are separate from reserve composition and would still matter to a holder deciding whether a stablecoin can be converted into fiat through the relevant issuer or distributor.

Why Multi-Issuance Matters

Circle wants MiCA to preserve multi-issuance as an available structure. Under its model, reserves can be split between global and EU-specific pools, with dynamic rebalancing between them.

For a holder, that structure could determine which reserve pool backs a token and which rules apply. The submission does not provide enough detail to calculate that effect. It also does not explain how often rebalancing could occur or how changes would be disclosed.

Circle has proposed a broader recognition system for stablecoins issued outside the EU. Foreign issuers would remain supervised in their home jurisdiction, subject to Commission-level regime equivalence and recognition by the European Banking Authority. Distribution in the EU would still go through a locally licensed institution.

This would matter to USDC because Circle wants a route for foreign-regulated stablecoins to remain available in Europe. The company also says the framework could work in reverse for EU-issued stablecoins through reciprocal recognition.

The proposal is not limited to reserve rules. Circle’s wider concern is access. It cites the Commission’s 2020 MiCA assessment, which warned that excluding foreign stablecoins from EU markets could push users toward offshore issuers and outside MiCA protections.

What Would Clarify the Impact

A consultation only sets out an issuer’s position. It does not change the current reserve requirements.

For holders, the practical test will be what the Commission and EU regulators ultimately accept, followed by any revised EBA standards. The key figures to watch are the required share of reserves held in bank deposits, the treatment of single-sovereign exposure and the number of banking counterparties larger issuers need.

Until those rules are set, Circle has established its preferred direction: more liquid reserve choices, greater flexibility for multi-issuance and access for foreign-regulated stablecoins. It has not shown how those changes would affect redemption for USDC, EURC or USDT.