Circle Calls for MiCA Stablecoin Reserve Reform

| decrypt.co
Circle is urging the European Commission to revise MiCA stablecoin rules ahead of the EU’s broader review expected in 2027. The USDC and EURC issuer says MiCA has attracted regulated firms, but only three of the 25 largest stablecoins by market value are currently covered by the framework. Circle wants the EU to preserve “multi-issuance”, allowing an EU-authorised entity and a foreign-regulated partner to issue the same stablecoin. It warned that tighter limits could push stablecoin activity offshore and weaken Europe’s competitiveness. The company also opposes MiCA’s fixed reserve requirements, which require e-money token issuers to hold at least 30% of reserves in commercial bank deposits, rising to 60% for significant tokens. Circle says these rules increase bank and counterparty risk, citing USDC’s temporary depeg after $3.3 billion of reserves were held at Silicon Valley Bank in March 2023. Circle supports liquidity-based standards focused on how quickly reserves can be accessed during redemptions, similar to proposals from the European Central Bank and other central banks. It also wants the EU to reconsider limits on exposure to a single sovereign and bank. Tether has opposed MiCA authorisation partly because of the deposit rules. The short-term trading impact is likely limited, but the MiCA review could influence stablecoin liquidity, exchange support, issuer costs and the long-term position of USDC, EURC and USDT in Europe.
Neutral
The immediate price impact is likely neutral because Circle’s proposals are policy recommendations rather than enacted rule changes. USDC and EURC may see limited short-term volatility if traders reassess European exchange support or regulatory access, but the news does not directly alter their dollar or euro pegs. In the longer term, more flexible reserve and liquidity rules could reduce issuer costs, lower bank concentration risk and improve stablecoin market efficiency. Preserving multi-issuance could also support USDC and EURC distribution in Europe. However, regulatory uncertainty remains, and stricter final rules could increase compliance costs, reduce liquidity or encourage offshore activity. The potential effects are therefore structural and gradual rather than an immediate bullish or bearish catalyst for the tokens themselves.