Circle and Tether Unite Against EU MiCA Rules, Warn Mandatory Bank Reserves Create Systemic Risk

Circle is petitioning the European Union to amend its MiCA regulatory framework to include a recognition regime that would allow foreign-regulated stablecoin issuers to distribute tokens through locally licensed institutions. Current rules demand e-money token issuers keep at least 30% of their reserves in commercial bank deposits, an amount that escalates to 60% for tokens classified as significant. The stablecoin operator is also challenging a 35% cap on exposure to a single sovereign entity and a rule limiting deposits with an individual bank to 1.5% of that lender’s total assets. Despite roughly 30 e-money tokens securing authorization since the rules took effect, only three of the top 25 stablecoins by market value—USDC, USDG, and EURC—are actually regulated under MiCA. The EU Commission’s review consultation closed on September 30, and the European Banking Authority recently urged regulators to strengthen controls against third-country multi-issuer structures.