Circle, the company behind the USDC stablecoin, is urging European regulators to rethink reserve requirements it says are pushing the world's largest stablecoins away from the European market, aligning itself with concerns raised by the European Central Bank.
Circle's Concerns With MiCA
In formal feedback submitted to the European Commission, Circle argued that the Markets in Crypto-Assets regulation's reserve mandates and concentration limits are proving counterproductive. The company contends that strict rules requiring issuers to hold significant portions of their reserves in bank deposits create friction that effectively keeps major global stablecoins from operating freely within Europe's regulatory boundaries.
The current framework imposes caps on how concentrated stablecoin reserves can be within individual banks. Circle maintains that these constraints, while intended to protect consumers and financial stability, are too rigid for the realities of how large-scale stablecoin issuers manage their holdings.
Rules meant to safeguard Europe's financial system may be driving the biggest stablecoins beyond its reach.
A Rare Alignment With the ECB
Notably, Circle's position echoes concerns voiced by the European Central Bank, which has also called for more flexibility in how stablecoin reserves are structured. The convergence of a private issuer and the region's central bank on this issue underscores a broader tension in how MiCA is being implemented across the continent.
Circle has pointed to several sticking points in its submission:
- Mandates requiring large reserve allocations held in bank deposits
- Concentration caps limiting exposure to any single institution
- Rules that it says disadvantage globally scaled stablecoins
What's at Stake
As one of the leading dollar-pegged stablecoin issuers worldwide, Circle has a direct interest in shaping how Europe treats these digital assets. The company frames its feedback as an effort to make MiCA workable for international players rather than a bid to weaken consumer protections.
The debate arrives as the European Union continues to refine its approach to crypto oversight, with MiCA widely viewed as a landmark framework that other jurisdictions are watching closely. How the Commission responds to industry and central bank feedback could influence whether major stablecoins expand their European footprint or retreat from it.