Circle Pushes for Changes to EU MiCA Stablecoin Rules Ahead of 2027 Review

Circle calls for changes to EU MiCA stablecoin rules covering reserve requirements, bank deposits and liquidity limits for USDC.

Circle, the issuer of USDC, is calling for changes to parts of the European Union’s Markets in Crypto-Assets Regulation (MiCA), including rules governing stablecoin reserves and banking relationships.

According to information shared by Coin Bureau, Circle argues that only three of the world’s 25 largest stablecoins are regulated under MiCA, leaving many of the largest stablecoins outside the European framework.

Circle has separately submitted its response to the European Commission’s consultation on the MiCA review, confirming that it wants changes to the rules governing reserve assets and concentration limits.

Circle Challenges MiCA Reserve Requirements

One of Circle’s main proposals concerns the requirement for e-money token issuers to maintain a portion of their reserves in commercial bank deposits.

MiCA currently requires issuers to hold at least 30% of reserve assets in commercial bank deposits, with the requirement rising to 60% for issuers of stablecoins classified as significant. Circle said it agrees with the European Central Bank’s view that the mandatory deposit requirement should be reconsidered.

Instead of a fixed deposit threshold, Circle is proposing a more flexible minimum liquidity requirement. The company argues that such an approach would place greater emphasis on the liquidity of reserve assets rather than requiring a predetermined share to be held as bank deposits.

The ECB and EU national central banks have also recommended replacing the existing deposit requirement with a framework requiring reserves to be held in assets that can mature quickly, according to Reuters.

Stablecoin Issuers Face Banking Concentration Limits

Circle is also seeking changes to rules governing how stablecoin reserves can be distributed among banks.

The company wants to remove a 1.5%-of-total-bank-assets cap per banking counterparty. Circle says the current limit could require larger issuers to maintain reserve relationships with dozens of separate banks, increasing operational complexity and risk.

Circle also called for changes to a 35% cap on exposure to a single sovereign. According to the company, the restriction makes it difficult for issuers of non-euro stablecoins, such as U.S. dollar-denominated tokens, to hold reserves primarily in highly liquid sovereign assets.

The proposals come as Circle maintains MiCA-compliant versions of its stablecoins in Europe. Circle says USDC and EURC are compliant with the EU framework, with EURC issued under a full-reserve model and reserves held at regulated financial institutions in the European Economic Area.

EU Review Expected to Shape Next Phase of MiCA

The European Commission’s review of MiCA is expected to address how the framework applies as the digital-asset market develops. Coin Bureau said the EU is expected to overhaul MiCA in 2027.

Circle described its consultation response as a contribution to the next phase of the regulatory framework and said it plans to continue engaging with European policymakers and regulators as the review progresses.

The debate over reserve requirements comes as European authorities continue assessing the relationship between stablecoins, commercial banks and financial stability. The outcome of the MiCA review will determine whether the EU’s existing stablecoin framework retains its current reserve structure or adopts the more flexible approach proposed by Circle and supported in part by the ECB.

Writer: Victoria Hale
Technology & Blockchain Writer

Victoria Hale writes about blockchain technology, digital infrastructure, and the intersection of emerging technologies with finance. Her articles explore how new protocols and systems are shaping the evolving digital economy.

She prioritises clarity and accuracy when explaining technical developments to a general audience.