Circle filed its response to the European Commission’s MiCA review on October 1. The company wants fixed bank-deposit quotas for stablecoin reserves replaced with liquidity-based tests. Europ
Circle, the issuer of USDC and the largest e-money token issuer authorized under MiCA, submitted its formal response to the European Commission’s review of the regulation on October 1, one day after the consultation closed. The company does not ask Brussels to dismantle the framework. It asks for the removal of fixed reserve quotas that it says expose issuers to the credit risk of the banks holding their cash, and for a mechanism that would let stablecoins regulated abroad circulate in the EU. The first request already has the backing of the European Central Bank, while the second runs directly against warnings from the bloc’s own supervisors.
We submitted feedback to the European Commission's MiCA Review Consultation
As the largest MiCA-regulated e-money token (EMT) issuer for both the dollar (@USDC) and the euro (EURC), and having been the first major global issuer to comply back in July 2024, @circle knows… pic.twitter.com/YvEME8czAr
— Patrick Hansen (@paddi_hansen) October 1, 2026
MiCA obliges issuers of e-money tokens, the category for stablecoins pegged to a single currency such as USDC and EURC, to hold at least 30% of their reserves as deposits in commercial banks, and the share rises to 60% once a token is classified as significant. Circle argues that the quota ties the safety of a stablecoin to the health of the banks holding the cash, and proposes that supervisors assess whether reserves are liquid enough to meet redemptions, whatever the instrument.
The company has direct experience with that exposure. In March 2023 it disclosed that $3.3 billion of USDC reserves were held at Silicon Valley Bank when the lender failed, and USDC traded well below $1 until US authorities guaranteed the deposits.
The submission also targets two limits set in the EBA’s technical standards, not in MiCA itself. A 35% cap on exposure to a single sovereign prevents a dollar stablecoin from keeping most of its reserves in US government paper, which is the most liquid asset available in its own currency. A second rule restricts deposits at any one bank to 1.5% of that bank’s total assets, and Circle says a large issuer would need relationships with dozens of banks to stay under it.
30% Bank-deposit minimum Standard tokens Bank risk 60% Bank-deposit minimum Significant tokens Double exposure 35% Single-sovereign cap Per government issuer Limits Treasuries 1.5% Per-bank deposit cap Of the bank’s total assets Dozens of banksThe European System of Central Banks, which groups the ECB and the national central banks, has recommended scrapping the same deposit requirement. Its concern is the bank, not the issuer. Circle says as much itself: its filing states that it concurs with the ECB. A lender that takes large deposits from a stablecoin company is funding itself with money that can leave within hours if token holders rush to redeem, which is far less stable than the retail deposits it may be replacing.
The central banks propose that a minimum share of reserves sit in assets maturing within roughly one to five working days. Circle and the ECB therefore describe the two ends of a single transmission channel: stress at a bank can break a peg, and stress at a stablecoin can drain a bank.
The stakes for Circle are commercial as well. Reserve income made up 95.2% of its $701 million in second-quarter revenue, earned on $73.3 billion of USDC in circulation, so any rule dictating where reserves sit shapes almost the entire income line.
Patrick Hansen, Circle’s director of EU strategy and policy, says only USDC, EURC and USDG among the world’s 25 largest stablecoins by market capitalization are regulated under MiCA. The European Banking Authority counted 39 e-money tokens issued under the regulation as of September 1. It counted zero authorized asset-referenced tokens.
The gap between regulated supply and actual usage is wide. ECB President Christine Lagarde said in May that the global stablecoin market exceeds $300 billion, with Tether and Circle controlling nearly 90%. Circle puts the entire euro stablecoin market at about €650 million in June 2026, against euro-area M2 above €16 trillion. EURC passed €400 million in August after doubling in a year, which makes it the largest euro token in a segment that barely registers next to dollar issuance.
Circle proposes two remedies. The first is to preserve multi-issuance, the structure it already uses for USDC, in which an EU entity and a foreign entity issue the same token, with formal safeguards such as rebalancing reserves between the two. The second is a longer-term equivalence regime modeled on the GENIUS Act and existing EU frameworks, under which a foreign-regulated issuer stays supervised at home and distributes in Europe through a locally licensed institution.
Supervisors object to the first of these. When the same token is issued by an EU entity and a non-EU entity, every unit is interchangeable, yet the reserves sit in separate pools. The European Systemic Risk Board warned in 2025 that holders of tokens issued elsewhere could redeem through the European entity during a crisis if terms there are better, leaving the EU pool to cover liabilities it was never sized for. The EBA repeated the point in late September, rating the risks of third-country multi-issuer schemes as “significant to very significant”. The ESCB went further in its September 22 response and named a ban on such schemes as its preferred option, according to Ledger Insights.
Circle vs. EU central banks: where they meet and where they split Bank-deposit quotaBoth: remove itAGREE Reserve designBoth: liquidity firstAGREE Multi-issuer stablecoinsPreserve vs. restrictCLASH Foreign-regulated stablecoinsEquivalence vs. tighter rulesCLASHWith the issuer and the central banks aligned, the deposit quota is the provision most exposed to revision, and a change would let Circle and its competitors move tens of billions of dollars from bank accounts into short-dated government securities. The sovereign cap and the 1.5% rule have no comparable institutional support so far.
Equivalence would reach well beyond Circle. European exchanges restricted USDT and other non-compliant tokens after MiCA’s stablecoin provisions applied in June 2024, and Hansen has estimated that roughly 99% of stablecoin supply originates outside the EU. Circle does not present its proposal as a route back for any specific competitor, but a recognition mechanism would decide whether those tokens can return to regulated European venues without rebuilding their issuance inside the bloc.
The Commission now has to weigh Circle’s filing against several others that arrived the same week. ESMA’s recommendations of September 30 call for a new licensed service category for firms offering access to DeFi protocols, rules for staking and crypto lending, and controls on influencer marketing, alongside lighter white-paper notifications. Tens of thousands of Europeans have written to the Commission asking it to relax the ban on stablecoin rewards, while the central banks want that ban extended to lending and staking workarounds. A consortium of European banks is meanwhile preparing its own MiCA-compliant euro stablecoin, which would give the bloc’s lenders a direct stake in how the reserve rules are rewritten.
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