Circle calls for changes to MiCA stablecoin reserve rules

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Circle has called on the European Commission to change MiCA rules requiring stablecoin issuers to hold part of their reserves in bank deposits.

The USDC and EURC issuer said the requirement can expose stablecoin issuers to credit and counterparty risks within the banking sector. Circle made the comments in its response to the Commission’s review of the Markets in Crypto-Assets Regulation.

Circle experienced similar risks in March 2023, when USDC briefly lost its dollar peg after the company disclosed that $3.3 billion of its reserves were held at Silicon Valley Bank. The funds were later made available after US authorities protected the bank’s depositors.

The Commission’s consultation closed on 30 September. Responses will contribute to its assessment of MiCA and whether changes are needed as crypto markets develop.