Circle is calling for changes to the European Union’s Markets in Crypto-Assets Regulation that would make it easier for qualifying foreign stablecoin issuers to distribute tokens in the bloc, while also challenging rules governing how issuers hold their reserves.
The proposals put Circle and Tether on similar ground over the treatment of bank deposits and liquidity, despite the companies taking different approaches to MiCA. Circle’s USDC is regulated under the framework, while Tether’s USDT remains outside it. According to CryptoSlate, the debate comes as European regulators review whether MiCA adequately manages risks linked to overseas issuers and stablecoin structures.
Circle proposes a second route for foreign issuers
Circle wants MiCA to include a recognition system for stablecoin companies regulated in other jurisdictions. Under the proposed model, the European Commission would first assess whether a foreign country’s regulatory regime was equivalent to EU standards. The European Banking Authority would then recognize individual issuers.
Those issuers would continue to be supervised mainly in their home markets, but could distribute their tokens in Europe through institutions licensed within the bloc. This would create an alternative to the current approach, which generally requires e-money token issuers seeking public distribution or trading in the EU to obtain authorization as EU issuers.
Circle said that only three of the world’s 25 largest stablecoins by market value—USDC, USDG and EURC—are currently regulated under MiCA. That compares with roughly 30 e-money tokens that have received authorization since the framework took effect.
The company also wants the EU to preserve “multi-issuance.” In that structure, a MiCA-authorized European entity co-issues a stablecoin with a foreign-regulated partner, allowing the token to circulate internationally. Circle argues that restricting this arrangement could push European users toward offshore platforms and tokens that do not provide the protections established by MiCA.
A recognition regime, Circle says, could bring more of the global stablecoin market within Europe’s regulatory perimeter. It could also support broader distribution in the bloc without requiring every major overseas issuer to establish itself as a fully authorized EU entity.
Dispute over bank deposits and reserve concentration
Circle is separately challenging MiCA’s reserve requirements for e-money tokens. The rules require issuers to keep at least 30% of reserves in commercial-bank deposits. For tokens designated as significant, the requirement rises to 60%.
Circle wants that prescriptive requirement replaced with a broader liquidity standard. Its argument is that forcing issuers to maintain large bank balances can increase exposure to bank credit and counterparty risk—the possibility that a financial institution may not meet its obligations.
That position overlaps with earlier criticism from Tether Chief Executive Officer Paolo Ardoino. He warned that requiring large stablecoin issuers to place substantial reserves with banks could create systemic vulnerabilities if banks failed or were unable to handle large withdrawals. Ardoino also said Tether had declined to seek an EU license because of the same requirement.
Circle additionally wants the EU to remove a 35% ceiling on exposure to a single sovereign and a rule limiting deposits with one bank to 1.5% of that institution’s total assets. The company said these restrictions can prevent dollar-denominated stablecoins from relying more heavily on high-quality sovereign securities and can require large issuers to distribute reserves among dozens of banks.
Stablecoins are digital tokens designed to maintain a relatively stable value against an asset such as the US dollar. Their reserves and redemption arrangements are therefore central to whether holders can exchange tokens for the referenced currency when needed.
Regulators weigh access against supervision risks
Circle’s proposals face concerns from European authorities. Last month, the EBA urged the European Commission to strengthen MiCA against risks associated with third-country multi-issuer stablecoin arrangements. The authority warned that reserves, redemptions and other important functions could remain outside effective EU supervision.
That concern creates a central tension in the review. Opening the framework to more foreign issuers could give European users access to a wider range of globally distributed stablecoins and bring more activity under recognized rules. At the same time, regulators may be reluctant to loosen requirements if critical assets or operations remain beyond their practical control.
The European Commission’s consultation on the MiCA review closed on September 30. Its findings could result in legislative amendments, but Circle’s recognition proposal does not provide an immediate pathway into the European market. Foreign issuers remain subject to the existing framework while Brussels considers whether the potential benefits of greater global liquidity justify changes to authorization, reserve and supervision rules.
Moneyiar market picture
Moneyiar market data at 09:49 on October 5, 2026, showed Ethereum at $2,716.6635051502, up 0.44% over 24 hours and 2.87% over seven days. Tether USDt was priced at $0.9997196726 at 09:48, down 0.02% over 24 hours and up 0.01% over seven days.
The same data showed Monad at $0.0323430455, down 4.47% over 24 hours but up 17.35% over seven days. Ethereum Name Service stood at $6.9029869021, rising 1.44% over 24 hours and 5.14% over seven days.
