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What Circle wants changed
In an October 1, 2026 summary of its response to the European Commission’s MiCA review consultation, Circle argues that the mandatory deposit floor should be reconsidered and replaced with a less rigid minimum asset-liquidity requirement. Circle says that a fixed deposit share can increase exposure to banking-sector credit and counterparty risk rather than simply making reserves safer. This is Circle’s policy argument, not an established finding that its alternative would be safer in every circumstance. Circle’s consultation-response summary is a company account of its submission, not the full filing.
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Circle also calls for removing two concentration constraints: the limit on exposure to a single sovereign and the cap tied to an individual bank’s total assets. It says the combination of these limits makes it harder for issuers of tokens denominated in currencies outside the EU to hold reserves mainly in sovereign high-quality liquid assets, and can require large issuers to maintain relationships with many banks. Those are Circle’s stated concerns; they do not establish that every issuer faces the same practical effects.
What MiCA’s reserve rules require
For the EMT categories covered by the rules described by Circle and the European Systemic Risk Board (ESRB), MiCA sets minimum shares of reserve assets that must be held as bank deposits. It also imposes concentration limits. The figures below describe the framework discussed in the 2026 consultation material and the ESRB’s 2025 report, not a proposal that has already been enacted to change those rules.
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| Rule | Requirement described in the sources | Circle’s requested change |
|---|---|---|
| Bank-deposit minimum | At least 30% of reserve assets for non-significant EMTs; at least 60% for significant EMTs. (Circle, October 2026.) | Replace the fixed minimum with a less rigid minimum asset-liquidity requirement. |
| Single-sovereign exposure | A 35% cap, as described in Circle’s consultation summary. | Remove the cap. |
| Individual-bank exposure | A deposit limit tied to 1.5% of that bank’s total assets, as described by the ESRB and Circle. | Remove the limit. |
These are not the only safeguards governing reserves. MiCA also addresses eligible liquid reserve assets, liquidity and segregation. The debate is about how those protections should be designed together, not whether an issuer should be free to hold reserves without constraints. Circle’s summary; ESRB, “Crypto-assets and decentralised finance” (2025).
Why a deposit floor can help—and create risk
The case for deposits
The European Banking Authority (EBA) says the deposit requirement is intended to support timely access to liquidity for redemptions and preserve bank funding. Bank deposits can be accessible when token holders seek to redeem, which is one reason the EBA does not treat the requirement as an unnecessary constraint.
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The risks of concentrating reserves at banks
The EBA also recognizes that rapid, large withdrawals could put pressure on banks. If a bank runs into difficulty, an issuer may face delayed access to reserves or losses. A minimum deposit share can therefore help with redemption access while increasing an issuer’s exposure to bank counterparties and the effects of a sudden withdrawal.
The alternative has its own transmission channel
The ESRB describes a broader trade-off: redemptions can transmit stress through withdrawals from banks or through sales of reserve securities. Large, fast deposit withdrawals may affect banks; rapid securities sales may affect market prices. A meaningful comparison of reserve designs must therefore consider how quickly assets can be used for redemptions, how reserves are distributed across banks and sovereigns, and how stress could spread through either channel. Neither “more deposits” nor “more securities” alone establishes which arrangement is safer.
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The EBA is not calling for an immediate rewrite
In its September 2026 response to the Commission’s targeted consultation, the EBA said the requirements were broadly appropriate at that stage and recommended leaving them unchanged until authorities had more experience with their application. It also acknowledged that a careful cost-benefit analysis of lowering the minimum deposit amount could be warranted.
“On the whole, the EBA considers the requirements broadly appropriate and suggests the requirements should remain unchanged until greater experience has been acquired with their application.”
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That statement is the EBA’s consultation position, not a final legislative decision. It underscores that the disagreement is about the balance between redemption readiness, bank exposure and practical reserve management—not a settled conclusion that Circle’s proposed replacement is superior. Read the EBA’s response.
What the evidence says about Tether
The ESRB’s 2025 report estimated that Circle held close to 90% of its reserves in Treasury bills, with an average duration of 12 days, and described Tether as holding around 65% in those instruments. Those are figures reported by the ESRB in 2025, not current reserve disclosures. They provide context about reserve composition, but they do not show that Tether opposes MiCA’s bank-deposit minimums or agrees with Circle’s requested changes.
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The European Central Bank has also discussed lessons for central banks from money market funds and stablecoins, but that policy context is not evidence of Tether’s position on Circle’s specific proposals. The available primary material establishes Circle’s proposal and broader regulatory discussion of the rules; it does not establish a matching Tether submission or endorsement. ESRB report (2025); ECB, “From money market funds to stablecoins: lessons for central banks” (June 1, 2026).
How the EU market context fits in
The ECB reported that market capitalization of MiCA-authorised euro stablecoins was around €450 million as of January 2026, compared with about €50 million at the beginning of 2024. Those figures concern authorised euro-denominated stablecoins only; they are not totals for the overall stablecoin market. The ECB analysis provides a measure of growth in that specific market segment, but does not settle how the reserve rules should be calibrated. ECB, “Euro stablecoins and their potential effect on sovereign bond markets” (April 2026).
What happens next
Circle’s consultation response is an input to the Commission’s review, not a change to MiCA itself. The cited consultation material does not establish a confirmed decision date or final legislative outcome. Until any change is adopted, the existing requirements remain the framework described by the sources; whether the Commission proposes revisions, and what form they take, remains unresolved.
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