Circle Urges MiCA Reform to Boost European Stablecoin Liquidity and Global Competitiveness

Circle has submitted its formal response to the European Commission’s consultation on the Markets in Crypto-Assets Regulation (MiCA), calling for structural refinements to reserve rules and cross-border issuance. For fintech leaders, the submission highlights the tension between strict regional oversight and the need for global liquidity in the rapidly maturing stablecoin market.

What was announced

Circle, the issuer behind the dollar-denominated USDC and euro-denominated EURC, has used its position as the largest MiCA-authorised e-money token (EMT) issuer to provide feedback on the regulation’s first two years of operation. While the framework has successfully led to the authorisation of approximately 30 EMTs, Circle points out a significant market gap: only three of the top 25 global stablecoins by market capitalisation—USDC, USDG, and EURC—are currently regulated under MiCA.

The submission identifies several friction points, particularly regarding reserve requirements. Currently, MiCA mandates that EMT issuers hold 30% of reserve assets in commercial bank deposits, a figure that rises to 60% for "significant" issuers. Circle argues this increases exposure to banking sector counterparty risk and suggests replacing these rigid minimums with a more flexible asset liquidity requirement. Furthermore, the firm recommends removing the 35% cap on single-sovereign exposure and the 1.5%-of-total-bank-assets cap per banking counterparty, noting that these limits force large issuers to manage dozens of separate banking relationships, increasing operational complexity and risk.

To bridge the gap between EU and global markets, Circle proposes a dedicated equivalence and recognition regime for foreign-regulated stablecoins. This model, inspired by frameworks like EMIR and the U.S. GENIUS Act, would allow foreign issuers to be supervised primarily in their home jurisdictions while being distributed in the EU through locally licensed institutions. The submission also advocates for preserving "multi-issuance" structures, where a global stablecoin is co-issued by an EU entity and a foreign counterpart, as a vital pathway for maintaining liquidity within the EU’s regulatory perimeter.

"Most stablecoins in circulation globally today are issued by entities regulated outside the EU. Multi-issuance, under which a globally circulating stablecoin is co-issued by a MiCA-authorised EU entity alongside its foreign-regulated counterpart, is currently the only structure through which that global liquidity can operate within MiCA's regulatory perimeter."

Circle

The companies involved

Circle is a central figure in the global digital asset ecosystem, primarily known as the issuer of USDC, one of the world's most widely used stablecoins. The company has established a significant footprint in the European market by becoming the first global stablecoin issuer to achieve compliance under the MiCA framework for both its dollar and euro-pegged tokens. This regulatory status allows Circle to operate within the European Economic Area, providing a bridge between traditional finance and blockchain-based value exchange.

The firm has been a frequent subject of industry analysis, with FF News tracking its developments across 83 separate reports. Beyond its role as an asset issuer, Circle has expanded its technological infrastructure to support the broader "internet of value." This includes the development of programmable money tools and institutional-grade blockchain platforms designed to facilitate real-time settlement and automated financial workflows. As the market for regulated digital currencies matures, Circle’s position as a MiCA-authorised entity places it at the forefront of the shift toward institutional adoption of stablecoins for cross-border payments and decentralized finance.

What FF News has reported before

FF News has closely followed Circle’s technological and strategic evolution. Recently, the publication covered how Circle Launches Arc: The Institutional Layer 1 Blockchain for the AI Agent Economy, marking a shift toward supporting automated economic activity. The integration of Circle’s assets into other ecosystems has also been a recurring theme; for instance, Alpen Labs Brings Circle’s USDC to Bitcoin for Native Lending and Trading, expanding the utility of the stablecoin beyond its native chains. Additionally, the firm’s infrastructure has been paired with advanced security measures, as seen when Socure Integrates RiskOS with Circle’s Arc Blockchain to Secure Real-Time Money Movement. These reports highlight Circle's ongoing efforts to embed its regulated tokens into diverse financial and technological stacks.

What this means

The submission signals a critical juncture for MiCA: it must decide whether to remain a "regulatory island" or integrate with the global liquidity pools dominated by non-EU entities. By challenging the bank deposit mandates, Circle is highlighting a systemic irony where regulations designed to protect users might actually increase risk by tethering stablecoins too tightly to the traditional banking sector’s vulnerabilities. The push for "multi-issuance" and equivalence regimes suggests that if the European Commission does not lower the barriers for global tokens to enter the perimeter, the EU market risks being sidelined as users seek liquidity through offshore, unregulated channels. This is a direct challenge to the EBA’s current conservative stance on reserve concentration.