Circle Tells Brussels to Scrap MiCA Bank Deposit Rule for Stablecoin Reserves — Citing Its Own 3.3 Billion USD SVB Scare

Circle has formally asked the European Commission to scrap MiCA’s rule that forces stablecoin issuers to park a fixed share of their reserves in commercial bank deposits — arguing the requirement exposes tokens like USDC to the very banking failures that nearly sank it in 2023, when 3.3 billion USD of its reserves were trapped inside Silicon Valley Bank.

By Maria Rodriguez | October 3, 2026

The Hook: When the Rule Meant to Protect You Creates New Risk

Stablecoins are digital tokens designed to hold a steady value, typically one token per dollar or euro, backed by reserves of cash and government bonds. Europe’s Markets in Crypto Assets regulation, known as MiCA, currently requires regular e-money token issuers to keep at least 30 percent of those reserves in commercial bank deposits. For stablecoins classified as significant, the minimum rises to 60 percent. The idea was simple: bank deposits are liquid, so issuers can always access cash when investors redeem.

In its Oct. 2 response to the Commission’s MiCA review consultation, Circle — the issuer of USDC and the euro stablecoin EURC — argued the opposite: mandatory deposits expose issuers to credit and counterparty risk in the banking system. Circle knows this from experience. In March 2023, USDC temporarily lost its dollar peg after the company disclosed that 3.3 billion USD of its reserves sat at Silicon Valley Bank when the lender collapsed. U.S. authorities ultimately protected depositors, and Circle got its money back — but the scare showed exactly how a bank failure can ripple into a token that was supposed to be boring.

On-Chain Evidence: What Circle and the Central Banks Actually Proposed

Circle’s alternative is to replace the fixed deposit thresholds with minimum liquidity requirements — rules based on how quickly reserve assets can be accessed for redemptions, rather than where they sit. That aligns Circle with an unlikely ally: the European Central Bank and the EU’s 27 national central banks, which proposed a similar model in September. The central banks’ version would set minimum proportions of reserve assets maturing within one working day and five working days.

• 30 percent — current minimum bank-deposit share for regular e-money token issuers under MiCA
• 60 percent — the minimum for stablecoins classified as significant
• 35 percent ceiling — current limit on exposure to a single sovereign, which Circle wants reconsidered
• 1.5 percent cap — current limit on deposits with one banking counterparty, relative to that bank’s total assets

The European System of Central Banks has its own concern: large stablecoin deposits behave differently from ordinary retail deposits. During heavy redemption periods, an issuer might have to pull huge amounts from its banking partners in a short window — effectively transmitting stress from the stablecoin market into commercial banks. In other words, both sides now agree the current design is flawed, even if they arrived from opposite directions.

The Core Conflict: Brussels vs. the World’s Biggest Stablecoin Players

The deposit rule has already divided the industry. Tether has refused to seek authorization for USDT under MiCA, with CEO Paolo Ardoino arguing the requirements could expose reserves to commercial bank failures. After MiCA’s transition period ended, the divide became visible in July, when OKX opened a route letting eligible European users convert USDT into MiCA-compliant USDC as restrictions on noncompliant stablecoins tightened. Tether continues to stay outside the regime.

Circle, by contrast, plays inside the system. It holds an Electronic Money Institution license from French regulators, granted in July 2024, and its European entity issues USDC and EURC for the region. EURC passed 400 million euros in circulation in August after more than doubling over the previous year, and data published in July showed the combined market capitalization of eight MiCA-compliant euro stablecoins climbed 128 percent in the year through June 28 — from 295.6 million USD to 673.9 million USD.

Beyond reserves, Circle asked the Commission to preserve what it calls multi-issuance — arrangements where an EU-authorized entity and a regulated entity outside the bloc jointly issue the same stablecoin. Circle warned that limiting the structure could push European users toward offshore providers operating outside MiCA’s protections. It also proposed a recognition system in which overseas issuers stay supervised at home while distributing tokens in Europe through a locally licensed institution.

Market Implications: Why This Matters for Your Wallet

If you hold a euro or dollar stablecoin in Europe, this fight is about the safety of the money backing your tokens. The current rules tie a large chunk of reserves to banks; the proposed changes would judge issuers on how fast they can actually pay you back during a redemption rush. For everyday users, the practical difference surfaces only in a crisis — but that is precisely when it matters most, as SVB week proved for USDC holders.

The consultation also drew wider industry requests. The Hyperliquid Policy Center asked regulators to treat crypto perpetual futures under MiFID II, the EU’s existing securities and derivatives framework, and to recognize public blockchain records for reporting obligations. The Global Blockchain Business Council sought clearer token-classification rules and less overlap between MiCA and payment-services regulation.

The Verdict: A Rare Alignment, but No Changes Yet

Nothing changes today. The Commission opened this review to gather feedback on how MiCA is functioning, and submissions from issuers, banks, industry groups and public authorities will feed into its assessment. But the notable story here is convergence: the industry’s largest compliant issuer and Europe’s central bankers — groups that rarely agree on anything — have both concluded that fixed bank-deposit mandates are the wrong tool. When critics and regulators converge on the same flaw, the odds of reform rise. For stablecoin users in Europe, that is a debate worth watching rather than worrying about: your tokens are not changing today, but the rules protecting them might soon.

The cryptocurrency market remains highly volatile. This article is for informational purposes only and does not constitute financial advice.