Circle Challenges EU Stablecoin Reserve Rules Following SVB Collapse

The USDC issuer contends that current Markets in Crypto Assets (MiCA) rules—which mandate that issuers hold 30% to 60% of their reserves in commercial bank deposits—unnecessarily expose stablecoins to banking sector volatility. Instead, Circle advocates for a liquidity-focused model that prioritizes the speed at which reserve assets can be accessed for redemptions. This stance aligns with recent proposals from the European Central Bank, which noted that massive, rapid withdrawals by stablecoin issuers could transmit financial stress directly to their banking partners.

Refining Reserve and Issuance Frameworks

Beyond deposit reform, Circle is pushing for the preservation of "multi-issuance" arrangements, which allow regulated entities both inside and outside the bloc to jointly issue the same token. The company warns that restricting this structure could inadvertently drive European users toward less regulated, offshore providers. Furthermore, Circle seeks to ease caps on sovereign exposure and individual banking counterparty limits, which they claim complicate treasury management for large-scale issuers. While firms like Tether have opted to avoid MiCA authorization entirely due to these rigid reserve constraints, Circle continues to navigate the framework, having secured an Electronic Money Institution license in France earlier this year to maintain its presence in the European market.