Circle asks EU to revise MiCA rules for offshore stablecoins and drop bank deposit reserve requirement

Circle, the issuer of USDC, has submitted recommendations to the European Commission calling for changes to the Markets in Crypto-Assets regulation, or MiCA, as it applies to stablecoins issued outside the European Union. The company said the framework should include a recognition mechanism for foreign issuers rather than rely solely on the current structure. Under Circle’s proposal, oversight of offshore stablecoin issuers would remain primarily with regulators in the issuer’s home jurisdiction. Once equivalence is recognized by relevant parties and the European Banking Authority, or EBA, distribution inside the EU would be handled by locally licensed entities. Circle said the same mechanism should also allow euro-denominated stablecoins to circulate in jurisdictions outside the bloc. Circle also called for the removal of MiCA’s requirement that electronic money token issuers place 30% of reserve assets with commercial banks. For “significant” electronic money tokens, the ratio is 60%. The company argued that the requirement increases exposure to banking-sector credit risk and counterparty risk. The development was reported by Bitcoin.com News.