EU Regulator Classifies Circle’s USDC Stablecoin Under MiCA Oversight Rules

TLDR

• The European Banking Authority has placed Circle’s USDC stablecoin in a higher-tier e-money token category under the EU’s MiCA rules.
• USDC will now be jointly supervised by the EBA and France’s Autorité de Contrôle Prudentiel et de Résolution.
• USDC is the second-largest stablecoin with a market cap of about $73 billion, behind Tether’s USDt at $184 billion.
• EU-based token issuers have been pushing for regulated US dollar-pegged stablecoins in the region.
• The European Central Bank is still exploring a digital euro, which could be issued in 2029.

The European Banking Authority has given Circle’s USDC stablecoin a higher-tier classification under the European Union’s Markets in Crypto Assets rules. The decision was announced in a notice on Wednesday, October 14.

Under the MiCA framework, USDC now falls into a higher category of e-money tokens. This label means the stablecoin will face closer supervision than smaller tokens.

The EBA said USDC is the first e-money token in the EU to receive this classification. Cointelegraph reported that only 45 other projects hold e-money token status in the region.

How USDC Will Be Supervised

With the new classification, USDC will be overseen jointly by two regulators. The first is the EBA itself, which is the EU’s banking authority.

The second is France’s Autorité de Contrôle Prudentiel et de Résolution. This French agency supervises banks and insurance firms in the country.

The two bodies will now share responsibility for monitoring the stablecoin. Their oversight will follow the standards set out under MiCA.

USDC is the second-largest stablecoin in the world by market value. It has a market capitalization of about $73 billion.

The largest stablecoin is Tether’s USDt, which is valued at around $184 billion. Both tokens are pegged to the US dollar.

Push for Dollar Stablecoins in Europe

The EBA’s decision came as many token issuers based in the EU have pushed for regulated stablecoins tied to the US dollar. These issuers say demand for dollar tokens remains strong.

James Bennett, CEO of Stable Mint, spoke to Cointelegraph about the issue. He said Europe could not “wish away” dollar stablecoins.

Bennett added that regulators can still control the safeguards and rules that issuers must follow. Under MiCA, EU authorities have the power to set those standards.

Alexander Höptner, CEO of AllUnity, shared a similar view. “For European corporates to make cross-border payments globally, offering only a euro stablecoin isn’t enough,” he told Cointelegraph.

While issuers and regulators move closer to accepting dollar stablecoins, the European Central Bank is still working on its own digital currency. Policymakers continue to explore the launch of a digital euro.

The EU first proposed the central bank digital currency in 2020. The digital euro could be issued in 2029, once lawmakers finish the required legislation and a pilot program is completed.

For now, USDC enters a new phase of supervision in the EU following Wednesday’s notice. The $73 billion stablecoin will remain under the joint watch of the EBA and France’s regulator.

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