Circle urges EU to rethink stablecoin reserve rules in MiCA review

Circle has a proposal for Brussels: stop telling stablecoin issuers exactly how much cash to park in banks. The issuer of USDC and EURC filed a response to the European Commission’s review of the Markets in Crypto-Assets regulation, known as MiCA, on or around October 1, 2026. Its central request is that the EU replace mandatory bank-deposit minimums with more flexible, liquidity-based reserve rules. It also wants the bloc to keep cross-border stablecoin issuance on the table. What Circle wants changed Under the current framework, issuers of electronic money tokens (EMTs) must hold at least 30% of their reserves as commercial bank deposits. For tokens classified as significant, that floor jumps to 60%. EMTs are MiCA’s label for stablecoins pegged to a single official currency. USDC tracks the dollar, and EURC tracks the euro. Circle’s argument is that the rule is restrictive and could actually raise risks for the banking sector rather than shrink them. If a large slice of a stablecoin’s backing must sit in commercial banks, then a wave of redemptions turns into a wave of bank withdrawals. A rule meant to protect token holders could end up stressing the institutions holding their mo...