Circle urges EU policymakers to revise MiCA’s stablecoin issuance and reserve rules. The company’s EU policy head stated that only three of the world’s top 30 stablecoins comply with this framework.
In its policy submission on October 1, Circle requested adjustments to the regulatory framework for cross-border issuance, reserve assets, and recognition mechanisms for stablecoins regulated abroad. The company noted that Europe has authorized approximately 30 electronic money tokens, but current rules only cover a small number of the most widely used tokens globally.
Circle's Director of EU Strategy and Policy, Patrick Hansen, said:
Currently, only 3 of the top 30 stablecoins comply with MiCA regulations.
Hansen identified three tokens: USDC, USDG, and EURC. The accompanying policy article from Circle lists the top 25 stablecoins by market capitalization rather than the top 30, but still highlights these three compliant tokens.
Circle hopes MiCA retains cross-border issuance arrangements.
Under the arrangement Circle wishes to preserve, licensed European entities can co-issue stablecoins with affiliated issuers operating in other jurisdictions. Circle believes that restricting such arrangements could drive European users toward offshore service providers rather than bringing these activities under EU regulation.
For the company, this issue concerns both the availability of existing global stablecoins and the creation of new European tokens. Circle stated that MiCA has already spurred a group of regulated issuers, but many of the most widely used stablecoins remain outside its framework.
In defending this model, Circle cited a perspective from the European Commission’s 2020 impact assessment, which warned that excluding foreign stablecoins could drive users to purchase them from offshore providers, thereby missing out on MiCA’s protections. Circle’s submission also proposed implementing safeguards to allow reserves to be rebalanced between European and global issuance.
Circle's own business in Europe has also expanded under the current regulations. According to a report by crypto.news on August 18, the circulating supply of EURC has surpassed €400 million, more than doubling from the previous year. The report, citing Circle's data, stated that as of August 13, the circulating supply of EURC amounted to €402.4 million.
The report also stated that Circle issues EURC through its licensed French electronic money institution, with reserves segregated from company funds and subject to monthly third-party attestation. Eligible Circle Mint customers can redeem tokens for euros at a 1:1 rate.
In its August update, Circle stated that EURC's growth was partially driven by distribution on exchanges, payment service providers, and institutional platforms. The company noted that the token is used for payments, foreign exchange, fund management, settlement, and cryptocurrency trading.
MiCA's reserve adjustments will replace fixed deposit thresholds.
Regarding reserves, Circle urges policymakers to reconsider the requirement that electronic money token issuers must hold at least 30% of their backing assets in commercial bank deposits, with the requirement increasing to 60% for issuers deemed “significant.”
The company believes that mandatory deposits increase banks' credit risk and counterparty risk. Circle supports an approach based on the liquidity of reserve assets and their availability to meet redemption demands, rather than maintaining a fixed ratio.
Members of the Eurosystem also raised related requirements in their advisory responses. A report dated September 22 on the proposal for reserve rules stated that the Eurosystem supports eliminating minimum deposit requirements while maintaining liquidity safeguards. The report noted that the proposed liquidity requirements would cover a period of one to five days.
In addition to the deposit threshold, Circle also objects to two reserve concentration limits introduced in the European Banking Authority’s technical standards. Its filing challenges the 35% exposure cap to a single sovereign issuer and the rule limiting deposits with each bank counterparty to 1.5% of that bank’s total assets.
Circle believes that sovereign caps limit the ability of USD token issuers to use government-backed liquid assets. It also states that banking restrictions may force large issuers to maintain relationships with dozens of banks, increasing operational complexity.
The foreign stablecoin recognition mechanism will draw on U.S. regulations.
To enable longer-term market access, Circle proposes establishing a separate recognition pathway for stablecoins regulated abroad. Under its proposal, issuers would remain primarily regulated by their home jurisdiction and distribute tokens in Europe through locally licensed entities.
This proposed process will incorporate the European Commission’s assessment of foreign regulatory frameworks and the European Banking Authority’s approval decisions for individual issuers. Circle also supports reciprocal arrangements that allow euro-denominated stablecoins to circulate internationally.
For U.S. readers, this proposal is directly relevant to U.S. policy: Circle cites the foreign issuer framework in the GENIUS Act as a reference model for European recognition mechanisms.
Under U.S. law Title 18, foreign payment stablecoin issuers seeking a statutory exception must operate under a regulatory regime deemed comparable to the U.S. framework by the Treasury Department and register with the Office of the Comptroller of the Currency.
The law also requires eligible foreign issuers to maintain reserves at U.S. financial institutions sufficient to meet the liquidity needs of U.S. customers, unless otherwise provided by reciprocal arrangements. Registered issuers must submit to U.S. jurisdiction and comply with reporting, supervision, and examination requirements established by the Office of the Comptroller of the Currency.
Hyperliquid seeks derivative treatment for perpetual futures.
It was also reported that Hyperliquid Policy Center seized the MiCA review to request clear regulations for perpetual futures. A report dated October 1 outlined its submission to the EU on derivatives, urging regulators to classify products based on their economic characteristics rather than the manner in which blockchain technology is used.
The policy center believes that perpetual futures should remain subject to MiFID II regardless of how trades are recorded, as they are inherently derivatives. It also opposes applying restrictions originally designed for bilateral CFDs to markets that use transparent central limit order books.
Regarding reporting obligations, Hyperliquid requests regulators to recognize information that is already available in public blockchain records.