Circle Pushes EU to Ease Stablecoin Deposit Rules Under MiCA

Circle Calls for Overhaul of Foreign Stablecoin Rules Under MiCA

Circle, the issuer of the USDC stablecoin and the second-largest stablecoin globally, has formally proposed a new regulatory framework for foreign-regulated stablecoins operating in the European Union. The proposal, submitted under the EU's Markets in Crypto-Assets regulation, argues that strict bank deposit requirements for stablecoin reserves should be replaced with a system where international issuers are primarily supervised in their home jurisdiction, provided those measures are equivalent to EU standards.

The core of Circle's proposal centers on distribution. Under the new regime, locally licensed institutions would handle the distribution of foreign stablecoins within the EU, rather than requiring the issuer itself to establish and maintain banking relationships across the bloc. This approach, Circle argues, would reduce friction for global stablecoin issuers while maintaining investor protection through equivalent home-country oversight.

The current MiCA framework imposes significant requirements on stablecoin issuers, including prudential safeguards such as asset segregation and redemption rights. For e-money tokens like USDC, these rules often translate into holding substantial reserves in traditional bank deposits, which Circle contends creates unnecessary concentration risk and operational complexity for cross-border stablecoin operations.

By shifting primary supervisory responsibility to the issuer's home regulator, Circle's model would align with how other cross-border financial services are treated under EU law. The proposal requires that home-jurisdiction measures be deemed equivalent to those applied in the EU, a standard that would need to be assessed by EU authorities on a country-by-country basis.

The outcome of this push could shape how major stablecoins, including USDC, access the EU market in the years ahead. If adopted, the framework would allow Circle and other international issuers to operate through licensed distribution partners rather than maintaining direct banking relationships across multiple EU member states.

Source: Bitcoin.com News