Circle Calls for Revision of Stablecoin Reserve Requirements in MiCA Review
- Circle urged the European Commission to amend reserve requirements for stablecoins during a consultation on the Markets in Crypto-Assets Regulation (MiCA).
- Currently, e-money token issuers must hold at least 30% of reserves in commercial bank deposits, rising to 60% for significant issuers.
- Circle experienced risks firsthand when USDC lost its dollar peg after revealing that $3.3 billion of reserves were at Silicon Valley Bank.
- The company proposed replacing mandatory deposit minimums with flexible asset liquidity requirements and removing concentration limits on sovereign exposure.
- The Hyperliquid Policy Center and Global Blockchain Business Council also submitted recommendations during the consultation, focusing on crypto regulations and market structures.
Circle’s recommendations aim to mitigate banking-sector risks associated with current reserve requirements while ensuring stablecoin stability within the EU framework. The consultation closed recently, and responses will shape future regulatory assessments.
With Circle advocating for more flexible reserve rules, this could significantly impact how stablecoins operate under MiCA regulations moving forward, particularly after their experience with $3.3 billion in reserves.(Source)
