Circle has asked the European Commission to revise the reserve requirements inside the EU's Markets in Crypto-Assets framework, arguing that the rules forcing stablecoin issuers to hold large shares of their backing in bank deposits create exactly the kind of risk the regime was meant to prevent. The request was reported by CoinMarketCap on October 3, 2026, citing Circle's position that mandatory bank deposits expose issuers to bank credit and counterparty risk.
The pushback targets one of the less discussed mechanics of MiCA. The headline story for stablecoins under the framework has usually been about licensing, redemption guarantees, and the caps that can throttle a large dollar-pegged token in euro markets. The reserve composition rules sit underneath all of that, and they decide where the money actually sits.
The deposit requirement Circle is contesting
MiCA requires issuers of e-money tokens, the category that covers fiat-backed stablecoins like USDC, to keep a defined portion of their reserves as deposits in EU credit institutions. The intent is straightforward. Regulators wanted reserves held somewhere supervised, liquid, and close to the banking system that ultimately settles euro and dollar payments.
Circle's objection, as reported, is that a bank deposit is not a risk-free instrument. A deposit is a claim on a bank. If that bank runs into trouble, the depositor becomes a creditor, and uninsured balances above deposit-guarantee limits sit exposed. For a stablecoin issuer holding reserves that can run into the billions, deposit insurance covers a rounding error of the total. The rest is counterparty exposure to the specific banks chosen.
That concern is not abstract for Circle. In 2023, USDC briefly lost its dollar peg after Circle disclosed that part of its cash reserves was held at Silicon Valley Bank, which had just failed. The peg recovered once US authorities backstopped the bank's depositors. The episode is the clearest real-world case of the exact failure mode Circle now says MiCA's deposit rule could force issuers back into.
The regulatory logic cuts both ways
The tension here is genuine, and both sides have a defensible read. Regulators pushing bank deposits want reserves inside the perimeter they already supervise, where they can see the money and where resolution rules apply if something breaks. Spreading reserves into short-term government debt or a central bank facility would reduce single-bank exposure, but it also moves assets further from the supervised banking channel and can introduce its own liquidity and operational questions.
Circle's framing inverts the safety argument. In its view, concentrating reserves in commercial bank deposits does not diffuse risk, it concentrates it on the balance sheets of a handful of banks. A reserve weighted toward short-dated sovereign instruments, the argument goes, is closer to the cash-equivalent profile users assume a stablecoin already has.
This is a live policy fight rather than a settled rule change. A request to the Commission is the opening of a lobbying and consultation process, not a confirmed amendment. Any revision to MiCA's reserve mechanics would move through the EU's standard review channels, and the European Securities and Markets Authority has separately pushed for more supervisory authority over the sector, so the direction of travel is not obviously toward looser constraints on issuers.
The stake for stablecoin users and card spenders
For anyone holding or spending a euro or dollar stablecoin inside the EU, reserve composition is the part of the plumbing that determines whether the peg holds under stress. The token in a wallet is only ever as good as the assets behind it and the redemption promise attached. A reserve exposed to a single troubled bank is a different risk than one spread across government paper, even when both are labelled fully backed.
That matters directly for the growing set of cards that spend from stablecoin balances. When a card settles a purchase by converting USDC or a euro stablecoin at the point of sale, the user is implicitly trusting that the token will redeem at par. A reserve shock that briefly breaks a peg, as happened in 2023, is the kind of event that can ripple into settlement for everyone spending that token, not just traders watching an exchange screen.
The macro backdrop is calm for now. As of October 3, 2026, Bitcoin trades at $84,643, down 0.3% on the day, with the broader market flat and the Fear and Greed index at 67, in Greed territory. Stablecoin reserve policy is a slow-burn structural issue rather than a price catalyst, but it is the kind of rule that only gets attention after a bank wobble, not before.
Overview
Circle has asked the European Commission to revise MiCA's rule requiring stablecoin issuers to hold large portions of reserves as bank deposits, arguing the requirement imports bank credit and counterparty risk into the token itself. The company's 2023 brush with depegging over Silicon Valley Bank exposure is the concrete precedent behind the argument. The request opens a policy debate rather than changing any rule today, and EU supervisors have been leaning toward stronger oversight, not lighter touch. For stablecoin holders and the cards that spend from them, where reserves sit is the detail that decides whether a peg survives a bank failure.
