Circle has formally asked the European Commission to rewrite key parts of its stablecoin rulebook, arguing that the Markets in Crypto-Assets Regulation has licensed plenty of issuers while leaving the world's largest tokens outside Europe's regulatory perimeter.

The company, which issues the dollar-pegged USDC and the euro-pegged EURC, said Thursday it had submitted a response to the Commission's consultation on reviewing MiCA, the bloc's comprehensive framework for digital assets. Circle framed its recommendations as refinements to a framework it credits with giving Europe an early regulatory lead.

Its core argument is empirical: of the top 25 stablecoins by market value, only three are MiCA-regulated. The framework has succeeded in authorizing issuers but has not captured the tokens that dominate global circulation.

Preserve multi-issuance, Circle says

To close that gap, Circle urged the Commission to preserve "multi-issuance," the structure that allows a globally circulating stablecoin to be co-issued by an EU-authorized entity alongside its foreign-regulated counterpart. Restricting that structure, the firm warned, would simply push stablecoin activity offshore and out of the reach of European supervisors.

The reserve fight

Circle's most pointed requests concern reserves. MiCA currently requires e-money token issuers to hold at least 30% of reserves in commercial bank deposits, a threshold that rises to 60% for tokens designated as "significant" by regulators.

Circle argued the mandate increases, rather than reduces, exposure to banking-sector credit risk — concentrating stablecoin reserves in instruments that proved fragile during the March 2023 regional banking stress. The firm sided with the European Central Bank in calling for the deposit mandate to be replaced with a more flexible liquidity requirement.

The company also asked regulators to scrap two additional constraints: a 35% cap on single-sovereign exposure and a rule limiting how much an issuer can hold at any one bank. Under the current per-bank limit, large issuers would have to spread reserves across dozens of institutions, raising operational complexity and cost without a corresponding risk benefit, according to Circle's submission.

Timing and stakes

The submission arrives as Brussels prepares a broader MiCA overhaul. The European Commission is expected to revise the framework in 2027 to better address foreign stablecoin issuers, even as European crypto firms navigate the squeeze of MiCA's transition period and regulators press platforms such as Binance over compliance questions.

The policy fight also reflects a wider transatlantic contest over stablecoin dominance. U.S. issuers are expanding abroad, and Washington increasingly frames dollar-pegged tokens as an instrument for extending the greenback's global reach — positioning the EU's rules for euro-pegged and foreign tokens alike as part of a broader market-structure question.

For Circle specifically, the reserve rules carry direct operational consequences. EURC and any MiCA-authorized dollar token must restructure treasury operations if the 30%-to-60% deposit thresholds harden into practice, affecting how — and where — issuers hold the collateral backing their tokens.

The Commission's 2027 revision gives both the ECB and industry lobbyists roughly two years to shape the final reserve and issuance rules before the next phase of Europe's crypto framework takes effect.