Circle Calls for EU to Relax Stablecoin Deposit Rules Under MiCA

Why Circle Seeks Regulatory Flexibility

Circle, the US‑based stablecoin issuer, has asked the European Commission to drop the fixed bank‑deposit requirement for its reserve assets under the Markets in Crypto Assets (MiCA) framework, as the regulator finalises the EU’s crypto rulebook this year in the coming months.

The proposal targets a specific clause in MiCA that obliges stablecoin providers to maintain a minimum amount of fiat‑denominated deposits in traditional banks. Circle argues that this rule limits flexibility and could hinder the growth of digital payments, especially for cross‑border transactions. By removing the deposit floor, issuers could allocate capital more efficiently, supporting innovation while still complying with broader prudential standards.

In its submission, Circle argued that the fixed deposit requirement creates an artificial constraint on liquidity management. A spokesperson for the firm noted, „The current rule adds no extra safety net but ties up capital that could be used for customer protection and product development.” The company also highlighted that many stablecoin transactions occur outside the EU, making the rule less relevant for cross‑border payments.

Is Removing Deposit Requirements the Right Move?

Regulators and financial institutions have responded with mixed views. Some EU officials warn that easing reserve rules could expose the system to liquidity shocks, especially if stablecoin reserves are not fully backed. Others, including fintech lobby groups, argue that the rule is outdated and stifles competition in the rapidly evolving digital finance sector.

If the Commission adopts Circle’s suggestion, stablecoin issuers could operate with greater freedom, potentially accelerating adoption of digital payments across Europe. However, any relaxation will need to be balanced with robust oversight to maintain market integrity and consumer confidence.

Frequently Asked Questions

What is the fixed bank‑deposit requirement under MiCA? MiCA currently obliges stablecoin issuers to hold a set amount of fiat‑denominated deposits in traditional banks, ensuring that reserves are readily convertible to cash. Circle says this floor ties up capital without adding extra safety.

How would removing the rule affect Circle’s stablecoin operations? Without the deposit floor, Circle could allocate its reserve capital more flexibly, potentially increasing liquidity for users and supporting new product features. The change would also align the firm’s reserve management with broader EU prudential standards.

Does the EU plan to change other parts of MiCA? The European Commission is still reviewing MiCA as a whole, and any amendment to the deposit rule would likely be part of a broader set of adjustments aimed at balancing innovation with financial stability.