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Circle asks EU to soften MiCA stablecoin reserve requirements
Circle said mandatory bank-deposit minimums leave issuers exposed to banking-sector credit and counterparty risk, citing its 2023 USDC peg loss after $3.3 billion of reserves were held at Silicon Valley Bank.
Circle urged the European Commission to revise reserve requirements as it reviews the Markets in Crypto-Assets Regulation, or MiCA, according to a summary of Circle’s response.
Circle, the issuer of USDC and EURC, said the current approach of mandatory bank-deposit minimums should be replaced with more flexible liquidity rules, and it argued the changes should help preserve cross-border stablecoin issuance.
Circle said mandatory bank-deposit requirements could expose stablecoin issuers to banking-sector credit and counterparty risks.
It pointed to its own experience in March 2023, when USDC temporarily lost its dollar peg after Circle disclosed that $3.3 billion of its reserves were held at Silicon Valley Bank.