Circle has called for significant revisions to the EU's Markets in Crypto-Assets (MiCA) framework after its EU policy director revealed a substantial compliance gap. According to Circle's latest response to the European Commission's MiCA review consultation, only three of the world's top 25 stablecoins currently comply with MiCA rules. Patrick Hansen, Circle's director of EU strategy and policy, identified USDC, USDG and EURC as the only compliant tokens among the largest stablecoins globally. The company's October 1 policy submission highlighted that while Europe has authorized approximately 30 e-money tokens, its rules still cover relatively few of the largest tokens used worldwide. Circle's response reflects two years of operating experience as the largest MiCA-authorised e-money token issuer, positioning the company to provide detailed, practical insights on where the framework is working well and where targeted refinements are needed.
Circle is proposing significant changes to MiCA's reserve requirements, specifically requesting that e-money token issuers no longer be required to maintain at least 30% of backing assets in commercial bank deposits. For significant issuers, the current requirement rises to 60%. According to Circle's latest response, the company concurs with the ECB that this mandatory minimum deposit requirement should be reconsidered and replaced with a less rigid minimum asset liquidity requirement under MiCA. Circle supports an approach based on the liquidity of reserve assets and their availability to meet redemptions, drawing on the European System of Central Banks' preference for removing minimum deposit requirements while retaining liquidity safeguards covering one to five days. The company argues that mandatory deposits increase exposure to banks' credit and counterparty risks, pointing to its own experience when $3.3 billion of USDC reserves became caught up in the Silicon Valley Bank collapse in March 2023. European central banks have proposed a similar model, asking regulators to set minimum proportions of reserve assets that mature within one working day and five working days, allowing issuers to access funds during redemptions without requiring fixed shares as bank deposits.
Circle is advocating for MiCA to preserve existing cross-border issuance arrangements that allow licensed European entities to issue stablecoins alongside affiliated issuers operating in other jurisdictions. As reported by crypto.news, the company argues that restricting such arrangements could drive European users toward offshore providers rather than bringing their activity under EU supervision. Circle cited the European Commission's 2020 impact assessment, which warned that excluding foreign stablecoins could encourage purchases from offshore parties without MiCA protections. The company's EURC token has demonstrated strong growth, with €402.4 million outstanding as of August 13, representing more than double its supply over the preceding year. Circle issues both the largest dollar-denominated (USDC) and the largest euro-denominated (EURC) e-money tokens authorised under MiCA, giving the company a detailed, practical perspective on where the framework is working well. The regulatory divide has become more visible after MiCA's transition period ended, with Tether declining to seek authorization over deposit requirements, while OKX opened routes allowing European users to convert noncompliant USDT into MiCA-compliant USDC.
Circle has recommended removing two concentration rules introduced through the EBA's Level 2 technical standards that currently limit the growth of non-EU stablecoins. The company proposes removing the 35% cap on single-sovereign exposure, which makes it impossible for non-EU currency issuers (e.g. USD-denominated tokens) to hold primarily sovereign HQLAs in their reserve. Additionally, Circle recommends removing the 1.5%-of-total-bank-assets cap per banking counterparty, which will require larger issuers to maintain reserve relationships with dozens of separate banks to stay within the limit, thereby increasing operational complexity and risk. These changes would particularly benefit USD-denominated tokens and other non-EU stablecoins seeking to operate under MiCA. The company has separately proposed a recognition system for stablecoin issuers regulated outside the EU, combining European Commission assessment of foreign jurisdictions' regulatory frameworks with European Banking Authority decisions on individual issuer recognition.
Circle's EURC token has demonstrated significant growth under existing MiCA rules, with €402.4 million outstanding as of August 13, representing more than double its supply over the preceding year. According to crypto.news, the token's growth has been attributed partly to distribution across exchanges, payment providers and institutional platforms. Circle issues EURC through its licensed French electronic money institution, with reserves separated from corporate funds and subject to monthly third-party attestations, allowing eligible customers to redeem the token directly for euros at a one-to-one rate. Data published in July showed the combined market capitalization of eight MiCA compliant euro stablecoins had climbed 128% in the year through June 28, from $295.6 million to $673.9 million, with EURC, EURCV and EURI accounting for most of the growth. Circle's response emphasizes that MiCA has positioned the EU as a genuine first mover in comprehensive stablecoin regulation, with the goal of translating regulatory leadership into deeper liquidity, broader adoption, and a more dynamic role for Europe and euro stablecoins in the global market.
