Circle has told the European Union it wants to keep the current rules for stablecoins rather than tighten them, arguing that the existing framework has produced many regulated issuers while capturing few of the biggest global tokens. The company submitted recommendations to the European Commission’s MiCA review, urging the EU to preserve “multi-issuance” and loosen reserve requirements.
The push comes ahead of a broader 2027 MiCA overhaul. It reflects a wider U.S.-EU contest over stablecoin dominance.
The Numbers Behind the Submission
Circle points to a simple gap. Of the top 25 stablecoins by market value, only three are MiCA-regulated. That suggests the current regime has done a good job of registering issuers while missing the tokens that matter most.
MiCA, the Markets in Crypto-Assets Regulation, requires e-money token issuers to hold at least 30% of reserves in commercial bank deposits. For tokens deemed “significant,” the mandate rises to 60%. Circle argues that this forces issuers to take on more risk than necessary.
The company’s central complaint is credit risk. Holding money in banks exposes stablecoin issuers to the health of those banks. When a mandate pushes issuers to hold more money in banks, it increases their exposure to banking-sector credit risk.
Circle’s Side Against the Bank-Deposit Mandate
Circle is siding with the European Central Bank against the 30%-to-60% bank-deposit mandate. The company wants a more flexible approach to reserves, one that allows issuers to manage their cash in ways that reduce credit risk rather than increase it.
The company also asked regulators to scrap a 35% cap on single-sovereign exposure. It also asked to remove a rule limiting how much it can hold at any one bank. Both requests are aimed at giving issuers more room to operate without being forced into positions that could hurt them if banks fail.
Why Multi-Issuance Matters
Circle’s argument for preserving “multi-issuance” is straightforward. Warning restrictions would push activity offshore, the company argues.
The logic is that if the EU tightens the rules too far, issuers will simply move their operations elsewhere. That would leave the EU with fewer regulated tokens on its soil and less ability to oversee the market.
The company’s position is that the current system has worked well enough that it should be left alone. Regulating issuers is one thing; forcing the biggest tokens to comply is another.
The Broader Contest Over Stablecoin Dominance
This is not just a technical dispute over reserve requirements. It is part of a wider contest between the United States and the European Union over who sets the rules for digital money.
Circle’s submission to the EU review puts forward its view on how the rules should be shaped. The company’s position is clear: the current system works, and tightening it risks pushing activity offshore.
What Happens Next
The submission is part of the EU’s ongoing review of MiCA. The Commission will consider the recommendations alongside other feedback.
The outcome will shape the future of stablecoins in Europe. A tighter regime could push issuers toward offshore jurisdictions. A looser one could leave the EU with less oversight.
- The EU reviews MiCA’s rules.
- Circle submits its recommendations.
- The Commission considers the feedback.
The contest over stablecoin dominance is far from settled. But Circle has made its case.
Where the paper stands
The paper backs Circle’s push to preserve multi-issuance and loosen reserve requirements as a defense of small business against a regulatory regime that captures few of the biggest global tokens, and is against any tightening that would raise the cost of entry for smaller issuers. The paper opposes rules that protect the biggest players and raise the cost of entry for small ones.
The gap Circle points to is telling: of the top 25 stablecoins by market value, only three are MiCA-regulated. That shows the current regime registers issuers but misses the tokens that matter most. Tightening the rules further would likely push activity offshore, leaving the EU with fewer regulated tokens and less oversight.
The paper wants oversight narrow and aimed at the harm, not broad new rulebooks that benefit the biggest firms. It is against any tightening that would raise the cost of entry for smaller issuers.
Source material: “Circle Pushes Back on MiCA's Bank-Deposit Mandate for Stablecoins,” Decrypt.
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