Circle Urges EU to Relax Bank Deposit Rules for Stablecoins Under MiCA
Circle submitted comments to the European Commission arguing that MiCA's fixed bank deposit requirements for stablecoin reserves are unnecessarily restrictive. The USDC issuer also seeks to preserve cross-border co-issuance and create a recognition route for foreign stablecoins.
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Story Updates
- Updated Oct 2, 2026, 08:05 PM: Added Circle's requests for cross-border co-issuance preservation and foreign stablecoin recognition route; noted central bank demand for stronger safeguards.
Circle's Reserve and Cross-Border Proposals
Circle filed comments with the European Commission during its MiCA review, arguing that the regulation's mandate for fixed bank deposit ratios creates an unnecessary barrier to compliance. The USDC issuer stated that concentration caps and deposit mandates as currently written make it impractical for the largest global stablecoins to operate within the EU's perimeter. Beyond reserve composition, Circle also urged the Commission to preserve cross-border co-issuance arrangements and establish a recognition route for foreign stablecoins, according to reporting by The Defiant.
Alignment With Central Bank Position
Circle's position echoes concerns already raised by the European Central Bank, which has similarly called for more flexible reserve composition rules. By backing away from rigid deposit requirements, regulators could create conditions where major stablecoins choose to comply with MiCA rather than operate in a regulatory gray zone. However, central banks have simultaneously demanded stronger safeguards in any revised framework, suggesting the Commission faces competing pressures between industry flexibility and monetary stability concerns.
Broader MiCA Consultation Context
The European Commission is currently reviewing MiCA following its January 2024 implementation. Reserve and backing rules have emerged as a central friction point: requiring stablecoins to hold a fixed percentage of reserves in eligible bank deposits can be operationally constraining for global issuers with diversified funding bases. Circle's submission, which encompasses reserve design, cross-border operations, and foreign stablecoin recognition, represents one of the most comprehensive requests for MiCA modification from a major issuer to date.
Why It Matters
For Traders
Easier EU regulatory access for USDC could increase on-ramp liquidity and reduce spreads on European exchanges within 6–12 months if the Commission acts.
For Investors
Broader MiCA flexibility on cross-border co-issuance and foreign recognition would signal the Commission is balancing stability with operational practicality for global stablecoins.
For Builders
Stablecoin-based DeFi in Europe faces ongoing uncertainty; cross-border co-issuance rules and foreign recognition pathways will materially affect capital efficiency and deployment strategy.
This article is for information only and is not financial advice. Read the full disclaimer.
