Circle, the issuer of the USDC stablecoin, is asking EU policymakers to revise the bank-deposit and reserve-custody requirements that stablecoin issuers must satisfy under the Markets in Crypto-Assets Regulation (MiCA), according to Crypto News.

What is Circle targeting?

The request focuses on provisions of MiCA that govern asset-referenced tokens (ARTs) and e-money tokens (EMTs). Under the framework, issuers must hold reserve assets with credit institutions and meet prudential obligations tied to banking supervision. Circle argues these conditions create disproportionate compliance burdens for non-bank issuers, particularly for operators that already operate under equivalent regimes in other jurisdictions.

Why does the deposit rule matter operationally?

Reserve custody sits at the center of how stablecoins maintain their peg. MiCA requires issuers to park backing assets in low-risk, liquid instruments and, for significant EMTs and ARTs, to maintain liquidity buffers, own funds, and recovery arrangements. When reserve banks must be credit institutions, non-bank issuers face higher costs, narrower counterparty selection, and longer onboarding timelines. USDC, one of the largest dollar-pegged stablecoins by circulation, runs a substantial portion of its European activity under this regime.

What is MiCA's status today?

MiCA reached full application across EU member states in December 2024 after a phased rollout that began in mid-2023. The regulation created the first comprehensive licensing and conduct framework for crypto-asset service providers and stablecoin issuers in a major Western jurisdiction. National competent authorities share supervisory responsibilities with the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA), with the EBA holding direct remit over significant EMTs and ARTs.

What would it take to change the rules?

Amending MiCA's reserve and deposit provisions would require either legislative action by the European Commission and the European Parliament or revisions to EBA and ESMA technical standards. Industry pressure on the regime has grown as multiple stablecoin issuers have publicly flagged operational friction with European banking partners. The Commission's review clauses built into MiCA open a formal window to revisit specific articles without rewriting the regulation.

What to watch next?

The next concrete milestone is the EBA's ongoing review of technical standards for significant EMTs and ARTs, alongside the Commission's first scheduled regulatory review under MiCA. Any Commission-level amendment typically requires 12 to 24 months to clear EU co-legislative procedures, meaning operational relief, if granted, would arrive well after the current market-share dynamics in euro-denominated stablecoins have already shifted.