EU Grants Circle's USDC Significant Status Under MiCA Regulations
The European Banking Authority has classified Circle's USDC as a significant electronic money token under MiCA rules, making it the first EU stablecoin with this status. While granting regulatory legitimacy, the decision imposes strict reserve requirements.
The European Banking Authority (EBA) has granted Circle's USDC stablecoin the status of a "significant electronic money token" under the European Union's MiCA regulations. According to published data, USDC is the first and only one of 45 stablecoins in the EU to receive this classification. The decision grants the currency significant regulatory recognition, but also subjects it to stricter supervisory requirements, including the obligation to deposit a substantial portion of reserves in commercial banks.
Regulatory Framework and Supervision
With a global circulation of approximately $72 billion, USDC enters a category designated for stablecoins with significant systemic importance. According to MiCA rules, obtaining this classification requires a currency to meet at least three of seven criteria, including market capitalization or reserve volumes exceeding 5 billion euros, daily transaction volumes, and user base size. The status is not permanent, and compliance will be re-evaluated annually.
According to a report by Crypto Jungle, the new classification is set to take effect on November 12, 2026, creating a division of powers among European regulators. The EBA will assume direct responsibility for the financial aspects of the coin's operations, including reserve management, equity, liquidity mechanisms, and recovery and redemption plans.
Meanwhile, the French Prudential Supervision and Resolution Authority (ACPR), which granted Circle an electronic money institution license in July 2024, will continue to supervise corporate aspects, including corporate governance, prevention of conflicts of interest, outsourcing, and officer competence.
Reserve Requirements and Industry Concerns
Alongside the recognition of USDC's status, the new classification requires Circle to comply with stricter conditions than those applied to non-significant stablecoins. Among other things, the company will be required to hold 60% of its reserve assets in commercial bank deposits, compared to a rate of 30% for regular stablecoins. Additionally, the equity requirement will rise from 2% to 3%.
"Concentrating reserves on such a scale within the banking system could expose the currency to credit risks and risks concerning the stability of the banks where the funds are held," Circle warned in a position paper.
Central banking systems in Europe have also expressed concern over potential scenarios of mass redemptions, which could lead to deposit withdrawals from commercial banks. Rather than a rigid, uniform requirement, the possibility of using dynamic liquidity metrics was raised to adjust requirements to risk profiles.
Digital Dollar Versus the Euro
This decision may carry broader implications for the digital currency market in Europe. While the European Central Bank (ECB) continues to promote the development of the digital euro ahead of a target launch date in 2029, the recognition of USDC reflects an approach of regulating and supervising the use of a digital dollar rather than blocking it.
Dollar-pegged stablecoins are used, among other things, for remittances and crypto market activity, and may also be utilized in international transactions. For companies engaged in global trade, the option to use a dollar-pegged digital currency may offer an additional alternative for money transfers and payments.
However, the decision does not mean that every business in Europe has received unlimited approval to use USDC in every type of transaction. Use of the currency remains subject to the applicable regulatory framework and the requirements relevant to each specific activity.
