Circle Seeks Changes to EU Stablecoin Reserve Rules
BITmarkets Team
Oct 08, 2026
In a summary of its consultation response published Thursday, the issuer of USDC and EURC said requirements to hold a portion of stablecoin reserves in commercial banks create exposure to banking-sector credit and counterparty risks.
Circle experienced these risks in March 2023, when USDC temporarily lost its peg to the US dollar after the company disclosed that $3.3 billion of its reserves were deposited at Silicon Valley Bank. The funds were later made available after US authorities intervened to protect the bank's depositors.
Circle calls for more flexible stablecoin reserve rules
Under MiCA, issuers of e-money tokens must maintain at least 30% of their reserves in commercial bank deposits, with the requirement increasing to 60% for issuers classified as significant, according to Circle. The company recommended replacing these mandatory deposit thresholds with more flexible minimum asset liquidity requirements, aligning its position with proposals from the European Central Bank.
Circle also proposed removing two reserve concentration restrictions: a 35% limit on exposure to a single sovereign issuer and a cap restricting deposits with an individual banking counterparty to 1.5% of that bank's total assets. The company argued that a more flexible framework could allow stablecoin issuers to manage their reserves more effectively while maintaining appropriate safeguards.
Circle urges EU to preserve cross-border stablecoin issuance
Circle also encouraged the European Commission to retain “multi-issuance,” an arrangement in which an EU-authorized entity and a foreign-regulated counterpart jointly issue a stablecoin. According to Circle, restricting this structure could encourage users to move toward offshore stablecoin providers operating outside MiCA's regulatory protections.
The recommendations were submitted as part of the European Commission's MiCA review consultation, which closed Wednesday. The consultation sought industry feedback on the effectiveness of the existing framework and whether further adjustments are necessary as cryptocurrency markets evolve. The responses will help inform the Commission's assessment of MiCA and its consideration of digital asset activities that currently fall outside the regulation.
Crypto industry groups seek broader MiCA reforms
Other blockchain and cryptocurrency organizations also submitted recommendations addressing regulatory treatment of onchain financial markets. The Hyperliquid Policy Center urged the European Commission to regulate crypto perpetual futures under the EU's existing securities and derivatives framework, known as the second Markets in Financial Instruments Directive (MiFID II).
The organization recommended requirements that reflect the specific characteristics of perpetual futures markets and proposed recognizing public blockchain records as a means of satisfying transparency and recordkeeping obligations. Meanwhile, the Global Blockchain Business Council (GBBC) called for clearer token classifications, proportionate stablecoin safeguards and reduced regulatory overlap between MiCA and payment-services legislation.
Regarding cross-border stablecoin issuance, GBBC recommended establishing clearly defined redemption responsibilities, enforceable reserve rebalancing requirements and an accountable supervisory framework within the European Union.
Sources:
https://www.circle.com/blog/circles-response-to-the-european-commissions-mica-review-consultation
https://www.circle.com/pressroom/3-3-billion-of-usdc-reserve-risk-removed-dollar-de-peg-closes
https://gbbc.io/news/gbbc-responds-to-european-commission-consultation-on-the-review-of-mica
https://cointelegraph.com/news/circle-eu-stablecoin-reserve-rules-mica-review
