Circle Says Tighter MiCA Rules Would Push Users Offshore

Circle published its MiCA review submission on 1 October 2026, naming USDC, USDG and EURC as the only three of the world’s top 25 stablecoins inside the EU’s crypto law. Patrick Hansen, Circle’s senior director for EU strategy and policy, put the same three coins against a top-30 cut and said two of them are Circle’s.

The ask is not a blanket plea for looser rules. Circle wants Brussels to keep multi-issuance, the structure that lets a licensed EU entity co-issue a globally used token with a foreign affiliate, and to drop MiCA’s 30% and 60% bank-deposit floors. Europe’s central banks already want those floors gone. They do not want an open door for the same global coins.

Only Three of the Top 25 Sit Inside MiCA

Circle’s written post, drawing on two years of operating USDC and EURC as MiCA e-money tokens, says the gap is not a shortage of licensed issuers. It is the perimeter. The large tokens people already use sit outside it, and EU-issued tokens have not grown to that scale.

Hansen wrote that Circle was the first major global issuer to comply, in July 2024, through its French e-money licence. “Only 3 of the top 30 are MiCA-compliant today, and 2 of those are Circle’s,” he said. The third is USDG, the Global Dollar issued in the EU by Paxos Issuance Europe under Finland’s FIN-FSA.

THE COUNT INSIDE THE LAW

• Circle’s cut: Three of the top 25 stablecoins by market cap are MiCA-regulated: USDC, USDG and EURC.
• Hansen’s cut: The same three coins, measured against the top 30.
• EBA snapshot: As at 1 September 2026, 39 e-money tokens issued under MiCA and 0 asset-referenced tokens authorised.
• EURC scale: Hansen said on 14 August 2026 that EURC had crossed 400 million euro, more than 50% of the euro stablecoin market and more than 10 times its size at Circle’s MiCA launch.

A licensed market of 39 tokens can still miss the books that clear most global crypto trades. Tether’s USDT is not among the three. For a law sold as bringing the world’s dollar tokens under EU supervision, that is the hole Circle is pointing at.

Circle Wants the Bank Deposit Floor Scrapped

MiCA tells e-money token issuers to hold at least 30% of reserve assets in commercial bank deposits. That share rises to 60% when a token is classified as significant. Circle says the floor raises banking-sector credit and counterparty risk, and it wants the floor replaced by a liquidity test that looks at how fast reserve assets can be turned into cash.

It also wants two concentration limits in the European Banking Authority’s Level 2 standards taken out. One is a 35% cap on exposure to a single sovereign, which Circle says stops a dollar token from holding mostly US government paper. The other is a cap of 1.5% of a bank’s total assets per counterparty, which Circle says would force a large issuer to park cash at dozens of banks.

CURRENT RESERVE RULES VERSUS CIRCLE’S ASK

Those concentration caps are Circle’s problem as a dollar issuer. The deposit floor is the one that also bothers the central banks, and it is the rule that ties a token run to a bank’s funding book.

The Deposit Rule the ECB Wants Deleted

The European System of Central Banks, in its September 2026 consultation response, said minimum deposit requirements should be removed for e-money tokens and asset-referenced tokens. It wants MiCA to set minimum shares of reserve assets that mature within one working day and within five working days, using the EBA’s draft technical standards as a starting point.

If reserves are held as bank deposits, stablecoins can alter banks’ funding structures by replacing relatively stable retail deposits with deposits from stablecoin issuers, which tend to be less stable and more sensitive to market conditions.

European System of Central Banks, September 2026 MiCA review response

The same paper walks through the pipe in both directions. A run on a token forces the issuer to pull deposits, which can squeeze a bank if those deposits are a large slice of its funding. Bank trouble can also hit the token. The ESCB cites March 2023, when problems at Silicon Valley Bank fed a run on USDC.

Overnight reverse repos and short-term government bills can meet a one-day cash need without parking the float in commercial banks, the central banks wrote. They still want the ban on paying interest on stablecoins kept, a line that cuts against the U.S. fight over stablecoin yields.

The EBA, in a 24 September 2026 statement, said the existing issuer rules are broadly appropriate but that the minimum amount of reserves held as deposits should be reviewed. On this slice of the file, Circle is not fighting the monetary authorities. It is repeating them.

Multi-Issuance Is the Fight That Splits Brussels

The other ask is the one the official sector does not share. Under multi-issuance, a globally circulating stablecoin is co-issued by a MiCA-authorised EU entity and a foreign-regulated counterpart. Circle says that is currently the only structure that lets that global liquidity sit inside MiCA. Restricting it, the company wrote, would move the usage outside the EU’s perimeter rather than bring it in.

That is how USDC already works. Circle France issues the EU book. A US affiliate issues the rest. The tokens stay interchangeable. If that link is cut, a dollar minted in New York and a dollar minted in Paris stop being the same dollar, and the order book splits in two. Users who want the deep pool will not wait for a smaller EU-only coin. They will hold the offshore token.

The European Systemic Risk Board, in a 29 September 2026 response, scored the run, reserve, transfer, arbitrage and data risks of that model as very significant and said MiCA should disallow the multi issuance model. The ESCB said it stands by the ESRB’s recommendations, including the call to treat such schemes as not permitted, and added that if co-legislators still allow them they should come with a third-country equivalence test and hard safeguards. The EBA asked the Commission to strengthen the law against third-country multi-issuer schemes, which it said pose significant to very significant risks.

WHAT THE ESRB MARKED VERY SIGNIFICANT

• Run risk: Stress in one jurisdiction can drain EU reserves if tokens are interchangeable and holders can redeem wherever the terms look better.
• Reserve location: Assets sit where they were issued, while claims can show up in the other country.
• Transfer stops: A third-country authority can block reserve rebalancing in a crisis.
• Arbitrage: Fungible tokens let a holder buy cheap in a weaker regime and redeem at par, with no fee, from the EU issuer.
• Blind spots: Self-hosted wallets and foreign books make EU holdings hard to measure, which also blunts issuance caps that apply only to the EU entity.

Circle’s answer is dynamic rebalancing between global and EU-specific reserves, plus the safeguards already in the law. The official papers treat that as a hope, not a control. They worry that during a run, the EU issuer becomes the window with the best redemption terms for the whole world.

Why Foreign Coins Still Sit Outside MiCA

Most of the world’s stablecoin supply is issued by firms regulated outside the EU. MiCA can licence a new European token in months. It cannot, on its own, pull a foreign giant into the tent without either a local co-issuer or a recognition deal. Circle wants both: keep the co-issuer path now, and build a longer equivalence track modelled on EMIR, CSDR and MiFIR, and on the United States GENIUS Act treatment of foreign payment stablecoins.

Under that design, the home supervisor would stay in charge after a Commission-level finding that the foreign rulebook matches EU outcomes, plus EBA recognition of the firm. Distribution in the Union would run through a locally licensed institution. Circle says the same machinery could run in reverse for EU-issued tokens sold abroad.

The company pointed back to the Commission’s 2020 impact assessment for MiCA, which already warned that shutting foreign stablecoins out of EU markets would push users to buy them offshore, without the rights the law was written to give. That warning is the second-order point. A ban that looks like consumer protection can leave the consumer on an unlicensed venue.

Circle has submitted its response to the European Commission’s MiCA Review Consultation.

Our feedback draws on two years of experience operating USDC and EURC under MiCA, with a focus on strengthening Europe’s role as a dynamic, liquid stablecoin market.

In the response, we…

— Circle (@circle) October 1, 2026

An Equivalence Path Would Copy Tools the EU Already Uses

Hansen has been making that case for months. In July he wrote that among the top 50 stablecoins only USDC, USDG and EURC were MiCA-compliant, and that a recognition regime could bring foreign-regulated tokens in without forcing local issuance as the only door. Equivalence is not a crypto invention. The Union already uses it for clearing houses, settlement systems and other financial rulebooks.

The catch for Brussels is political, not technical. An equivalence finding for a US or Singapore dollar token would let a non-EU issuer reach EU users through a local distributor, with home-state supervision. That is close to what the ESRB does not want. It is also the only realistic way to put the tokens that already dominate trading onto a supervised rail without pretending Europe can mint a substitute at the same size.

Other firms used the same consultation window. Hyperliquid’s policy committee asked that perpetual futures stay under MiFID II as derivatives, rather than be pulled into MiCA, and argued against treating a transparent central limit order book like a bilateral CFD. That is a different file. The stablecoin fight is the one that decides whether MiCA’s 39 licensed tokens are the market or the annex.

Licensed Tokens Still Share the Floor With Offshore Coins

The Commission opened the review on 20 May 2026 and the consultation closed on 30 September at 23:59 CEST. The answers feed a mandated report on how the regulation is working. That report may come with a proposal to amend it. Until then the 30% and 60% deposit floors still apply, multi-issuance still sits in a legal grey zone, and the three large compliant coins still share European order books with tokens that never applied.

THE MICA REVIEW CLOCK

1. 30 June 2024: Titles III and IV, the e-money token and asset-referenced token rules, start to apply.
2. July 2024: Circle becomes the first major global issuer to issue USDC and EURC under a French e-money licence.
3. 30 December 2024: The rest of MiCA enters application.
4. 20 May 2026: The Commission opens the targeted review consultation.
5. 1 September 2026: The EBA’s snapshot counts 39 e-money tokens issued and 0 asset-referenced tokens authorised.
6. September 2026: The ESCB files to drop deposit floors and to follow the ESRB on multi-issuer schemes; the EBA files on 24 September; the ESRB files on 29 September.
7. 30 September 2026: The consultation window shuts.
8. 1 October 2026: Circle publishes its submission.

Europe now has a licensed stablecoin market that did not exist when MiCA was drafted, and it still does not hold the tokens that move most of the volume. Circle’s filing puts that gap on the Commission’s desk. The deposit floor is the rare point where the issuer and the central banks want the same edit. Multi-issuance is the point where they do not, and it is the one that decides whether the next run happens on a supervised book or on an offshore one.

Disclaimer: This article is news reporting and analysis of Circle’s MiCA consultation response and of filings by the EBA, the ESCB and the ESRB. It is informational only and is not investment, legal or regulatory advice, and it is not a recommendation to buy, sell or hold any stablecoin or other crypto-asset. Readers who may be affected by MiCA authorisation, reserve composition or token listing rules should consult a qualified lawyer or licensed financial adviser in their jurisdiction before acting. Figures, counts and consultation statuses reflect the cited official papers and company posts as of the dates given in the article and can change as the Commission writes its report.