Circle has called on the European Commission to review stablecoin reserve rules under the MiCA framework, proposing to replace mandatory minimum bank deposit requirements with more flexible liquidity standards and to maintain cross-border “multi-issuance” arrangements. According to the company, MiCA currently requires at least 30% of reserves to be held in deposits at commercial banks (60% for “significant” issuers). The issuer of USDC and EURC outlined its position in a response to the consultation, which concluded on Wednesday.

Liquidity Position Aligns with ECB View

Circle supported moving away from fixed deposit minimums in favor of minimum liquidity requirements for assets, noting that this position is consistent with the European Central Bank. The company added that mandatory bank deposits increase credit and counterparty risks associated with banks. In March 2023, USDC temporarily lost its dollar peg after $3.3 billion of its reserves were revealed to be held at Silicon Valley Bank; the funds later became available following actions by U.S. authorities regarding the bank’s depositors.

Remove 35% Sovereign and 1.5% Bank Concentration Limits

The company proposed removing two reserve concentration limits: a 35% cap on exposure to a single sovereign issuer and a 1.5% limit on deposits with any one counterparty, based on the total assets of the relevant bank.

Maintain “Multi-Issuance” for Cross-Border Issuance

Circle called for preserving “multi-issuance,” where an EU-authorized entity and a foreign regulated company jointly issue a stablecoin. The issuer believes restricting this model would push users toward offshore providers outside the MiCA framework.

Industry Suggests Adjustments for On-Chain Derivatives

The Hyperliquid Policy Center, in its response, proposed classifying crypto perpetuals under the existing EU securities and derivatives framework (MiFID II), taking into account their market specifics and recognizing public blockchain records for transparency and accounting. The Global Blockchain Business Council recommended clearer token classifications, proportionate measures for stablecoins, less duplication between MiCA and payment services rules, as well as clear redemption obligations, reserve rebalancing mechanisms, and an accountable supervisory scheme in the EU for cross-border issuance.