Circle urges EU to ease strict bank reserve rul... - Pluang

Circle, the issuer of the USDC stablecoin, has reportedly urged European Union regulators to reconsider strict rules governing how stablecoin reserves must be held at banks. The company's argument centers on the concern that requiring full backing in bank deposits could concentrate risk in the banking system rather than reduce it, and may limit the operational flexibility needed to manage large reserve pools.

For markets, the debate matters because reserve rules directly shape how stablecoins are issued, redeemed, and supervised. Tighter requirements can raise compliance costs and influence where issuers base operations, while looser ones may broaden the range of eligible reserve assets. Either outcome can affect liquidity conditions in crypto trading pairs and the attractiveness of euro-denominated stablecoins.

What to watch is how EU authorities respond under the Markets in Crypto-Assets framework and whether any adjustment signals a broader regulatory shift. For now, the discussion remains a policy debate rather than a confirmed rule change, and no timeline for a decision has been indicated.