Circle is pressing the European Union to open its stablecoin rulebook to foreign-regulated issuers and to ease reserve requirements that the company says are driving global liquidity away from the bloc. In a proposal submitted as part of the European Commission's MiCA review, the U.S. issuer of USDC called for a recognition regime that would let qualifying overseas stablecoin companies distribute tokens in Europe without becoming fully authorized EU issuers.
Only three of the world's 25 largest stablecoins by market value — USDC, USDG and EURC — are currently regulated under MiCA, even though roughly 30 e-money tokens have secured authorization since the framework took effect. Circle argues that the gap shows the current rules aren't attracting the largest players.
How the recognition plan would work
Under Circle's proposal, the European Commission would first determine whether a foreign jurisdiction's regulatory regime is equivalent to EU standards. The European Banking Authority would then recognize individual issuers. Those recognized foreign issuers would remain primarily supervised in their home countries while distributing tokens through locally licensed institutions. The plan offers no immediate route into Europe: foreign issuers remain subject to the existing framework while Brussels decides whether to open MiCA to more global liquidity.
Circle also wants regulators to preserve multi-issuance, where a MiCA-authorized European entity co-issues a globally circulating stablecoin with a foreign-regulated counterpart. Restricting that structure, Circle argues, risks pushing European users toward offshore platforms and tokens outside MiCA's protections.
The fight over bank reserves
Circle is challenging a MiCA requirement that e-money token issuers keep at least 30% of reserves in commercial-bank deposits, rising to 60% for tokens classified as significant. The company wants that replaced with a broader liquidity standard, arguing mandatory deposits increase issuers' exposure to bank credit and counterparty risk.
The concern is not unique to Circle. Tether CEO Paolo Ardoino warned that forcing large stablecoin issuers to place substantial reserves in banks could create systemic vulnerabilities if those institutions failed or could not meet large withdrawals. Ardoino said last month that Tether declined to seek an EU license because of the bank reserve requirement.
Circle chose to comply with MiCA while Tether kept USDT outside the framework. Yet both now argue that requiring stablecoin issuers to concentrate liquidity in commercial banks can introduce risks regulators are seeking to contain.
Sovereign exposure and deposit limits
Circle is also seeking removal of a 35% cap on exposure to a single sovereign and a rule limiting deposits with an individual bank to 1.5% of that lender's total assets. The company says those restrictions can prevent dollar stablecoins from relying heavily on high-quality sovereign securities and force large issuers to spread reserves across dozens of banks.
EBA pushback and next steps
The EBA last month urged the European Commission to strengthen MiCA against risks arising from third-country multi-issuer stablecoin structures, warning that reserves, redemptions and other critical functions can sit beyond effective EU supervision.
The European Commission's MiCA review consultation closed on Sept. 30. Its findings could lead to legislative amendments. For now, Circle's recognition proposal is just that — a proposal, with no timeline attached and no guarantee that Brussels will take it up.
