The European Banking Authority announced on October 14 that USDC issued by Circle Internet Financial Europe SAS is the European Union's first significant e-money token under the Markets in Crypto-Assets Regulation (MiCA). The EBA said USDC is the first token to receive that classification among 45 e-money tokens notified under MiCA. The designation sets up a November 12 transfer of key supervisory responsibilities from France's Prudential Supervision and Resolution Authority (ACPR) to the EBA.
From November 12, the EBA will directly supervise the EU issuer's own funds, meaning regulatory capital. The EBA will also supervise the issuer's reserve of assets and liquidity requirements. The EBA will oversee recovery and redemption plans. The ACPR will retain supervision of governance, qualifying holdings, and fit-and-proper assessments. The ACPR will also retain oversight of outsourcing and conflicts of interest. The EBA said the two authorities will cooperate on the transition.
MiCA assigns the EBA responsibility for supervising compliance with Articles 55 and 58 by significant e-money token issuers that are electronic money institutions. Those provisions cover recovery and redemption planning, along with additional reserve, liquidity and own-funds obligations. Article 54 requires credit institutions to hold at least 30% of funds received in exchange for e-money tokens in separate accounts. The remainder must be invested in specified secure, low-risk and highly liquid instruments denominated in the token's referenced currency.
Circle's October 1 response to the European Commission's MiCA review recommends replacing mandatory minimum bank deposits with a more flexible minimum asset-liquidity requirement. Circle argues that compulsory deposits increase exposure to banks' credit and counterparty risk. Circle describes the deposit floor as 30% of reserve assets for e-money token issuers, rising to 60% for significant-token issuers. Circle also recommends removing a 35% cap on exposure to one sovereign. Circle recommends removing a banking-counterparty cap measured against 1.5% of that bank's total assets. Circle argues that the banking-counterparty cap would require larger issuers to maintain relationships with dozens of banks. Circle's reserve proposals remain a separate policy debate from the supervisory handover.
The EBA identifies Circle Internet Financial Europe SAS and Circle Internet Financial, LLC as separate USDC issuers in the EU and US, respectively. Circle's USDC white paper describes reserves held by the European entity for European Economic Area holders. The white paper describes reserves held by the US entity for holders outside the European Economic Area. Tokens issued by the two entities are fungible. A global USDC circulation figure does not describe the European issuer's reserve portfolio. Circle's consultation response asks Europe to preserve multi-issuance and formalize safeguards, including dynamic rebalancing between global and EU-specific reserves.
The EBA said the authority signed a memorandum with the New York State Department of Financial Services to facilitate cooperation and information exchange on stablecoin activities. The EBA announcement provides no peg guarantee or new insurance. The announcement gives holders no instruction to move funds and does not automatically change redemption terms. Circle's white paper excludes EU deposit-guarantee and investor-compensation coverage.