Circle has submitted formal feedback to the European Commission's targeted consultation on the review of the Markets in Crypto-Assets Regulation, arguing that the framework's stablecoin reserve rules need loosening after two years of operational experience.
The issuer of USDC, the world's second largest dollar-pegged stablecoin behind Tether's USDT with a market capitalisation of 74 billion dollars, is among the largest companies affected by MiCA's e-money token regime. Circle issues the largest MiCA-authorised US dollar and euro e-money tokens currently in circulation.
According to figures cited in Circle's submission, about 30 e-money tokens have been authorised under MiCA since the regulation took effect, yet only three of the top 25 global stablecoins by market capitalisation are currently regulated under the framework. Circle frames this gap as evidence that the rules, as written, are discouraging broader participation by major issuers.
Reserve ratios under scrutiny
The core of Circle's complaint concerns how reserves backing e-money tokens must be held. MiCA currently requires issuers to keep at least 30% of reserve assets as bank deposits, rising to 60% for tokens designated as "significant". Circle wants this fixed ratio replaced with a more flexible minimum asset liquidity requirement, arguing that a blanket deposit threshold does not reflect how issuers actually manage liquidity risk.
On this point, Circle says its position aligns with that of the European Central Bank, which has also raised concerns about the current reserve structure.
Circle is also pushing to abolish two other constraints: the 35% cap on risk exposure to any single government bond, and the 1.5% limit on reserves that can be held with a single bank counterparty, calculated as a share of that bank's total assets. Both caps, in Circle's view, impose rigidity that is not matched by a corresponding benefit in reserve safety.
A regime for foreign stablecoins
Beyond reserve mechanics, Circle has proposed that the Commission establish a long-term equivalence and recognition regime for stablecoins regulated outside the EU, modelled on existing frameworks used elsewhere in European financial markets regulation. Such a mechanism would allow foreign-regulated stablecoins to operate within the EU without full MiCA authorisation, provided their home regime is judged equivalent.
Circle also addressed multi-issuance structures, in which an EU-based entity and a foreign counterpart jointly issue a token. The company describes this arrangement as currently the only mechanism available for keeping global liquidity pools connected to the European regulatory framework, suggesting that without such structures, liquidity would migrate away from EU-supervised markets entirely.
The Commission's targeted consultation forms part of a broader review process examining how MiCA has functioned since its stablecoin provisions came into force. Circle's submission adds one of the more detailed industry responses to that process, reflecting the practical experience of an issuer operating at the top end of the MiCA-regulated market.
