The European Banking Authority (EBA) ruled on Wednesday, 14 October: USDC, Circle's dollar stablecoin, becomes the first “significant” e-money token (EMT) within the meaning of the European MiCA regulation, reports Journal du Coin. None of the 44 other notified tokens crossed this threshold. From 12 November, USDC will come under the joint supervision of the EBA and the ACPR, the French banking supervisor.

Circle is not entering unknown territory: back in 2024, it was already the first MiCA-compliant issuer. With this classification, however, it inherits the most demanding regime in the text.

Two tiers for stablecoins

MiCA provides for two levels for currency-backed stablecoins. The first is the e-money issuer licence, which Circle's French subsidiary has held since July 2024. The second applies when a token becomes too large to remain under the supervision of a national authority alone.

Article 43 of the regulation sets four size criteria: the number of holders, the value in circulation, the daily volume and the weight in cross-border payments. Article 56 moves an EMT into the “significant” category as soon as it meets three of them. The EBA did not specify which ones USDC meets.

Who supervises what

According to the EBA's official press release cited by Journal du Coin, the roles are split as follows: the EBA will supervise own funds, reserves, liquidity and the recovery and redemption plans; the ACPR will retain oversight of the issuer's governance, including its management. The EBA will also chair a college of supervisors bringing together the authorities concerned.

The status comes with heavier obligations. MiCA requires significant issuers to hold a higher own-funds buffer, and a larger share of their reserves must be deposited with European banks.

Circle challenges the deposit rules

It is this last point that Circle is contesting. In early October, as part of the MiCA review, the issuer asked for the fixed bank-deposit thresholds to be replaced by liquidity requirements. It pointed out that the collapse of Silicon Valley Bank had frozen $3.3 billion of USDC reserves in March 2023.

At this stage this is a request from the issuer, not a decision: it is the European Commission that rules on the MiCA review. The timetable is tight, as the transfer of responsibilities to the EBA takes place within four weeks. In addition, the EBA has signed an information-sharing agreement with New York's financial regulator, which supervises Circle in the United States.

A narrow European market, without Tether

USDC, the world's second-largest stablecoin, has a market capitalisation of around $73 billion, compared with $184 billion for Tether's USDT. Tether has never applied for MiCA authorisation and remains outside the regulated European market; regulated European platforms have delisted it.

The European market for regulated stablecoins remains limited. At the end of July, only three major stablecoins out of the fifty largest on the market passed the MiCA filter: USDC, EURC and USDG. The Union then had some thirty authorised EMTs from around twenty issuers. The EBA now counts 45, but none comes close to the size of USDC. Circle is also present in the euro segment: its EURC alone holds 40 to 50% of it.

Industry players interviewed by Cointelegraph believe that Europe has to come to terms with dollar stablecoins. James Bennett, CEO of Stable Mint, takes the view that Europe cannot ignore them, but that it can regulate their issuers. Alexander Höptner, CEO of AllUnity, itself the issuer of a euro stablecoin, considers that offering only a euro stablecoin is not enough for European companies to make cross-border payments on a global scale.

What about Switzerland?

MiCA is a European Union regulation: it does not apply in Switzerland, which is not a member. The classification decided by the EBA concerns the supervision of USDC within the Union; in Switzerland, stablecoins fall under Swiss law, which is separate from the European regime.

Sources

  • Journal du Coin: “MiCA : l'USDC devient le premier stablecoin « significatif » de l'Union européenne”