The European Banking Authority (EBA) has placed Circle's USDC stablecoin under a higher-tier classification within the European Union's Markets in Crypto Assets (MiCA) framework, according to a notice published by the regulator on Wednesday, October 14. The EBA said USDC is the first e-money token in the EU to receive the designation, marking a new phase of supervision for the world's second-largest stablecoin. The move sets a precedent for how the bloc will supervise large dollar-pegged tokens under the crypto rulebook it has built.

The decision, set out in an official notice published by the EBA, moves USDC into a higher category of e-money tokens. Tokens carrying this label face closer supervision from EU authorities than smaller tokens in the bloc. Under MiCA, e-money tokens are crypto assets designed to maintain a stable value by referencing a single official currency. According to Cointelegraph, only 45 other projects currently hold e-money token status across the region.

Joint Supervision by Two Regulators

Under the new classification, USDC will be overseen jointly by two bodies. The first is the EBA itself, the EU's banking authority. The second is France's Autorité de Contrôle Prudentiel et de Résolution (ACPR), the agency that supervises banks and insurance firms in the country.

The two regulators will now share responsibility for monitoring the stablecoin, and their oversight will follow the standards set out under the MiCA framework, the EU's comprehensive regime for regulating crypto-asset markets and issuers. The structure gives the EBA a direct supervisory role for the token, a responsibility MiCA reserves for stablecoins that reach this tier.

Market Standing Among Dollar-Pegged Tokens

USDC is the second-largest stablecoin in the world by market value, with a market capitalization of about $73 billion. The largest stablecoin, Tether's USDt, is valued at around $184 billion. Both tokens are pegged to the US dollar. The size gap between the two illustrates the stakes for EU supervisors, who will now monitor the second-largest stablecoin in the market.

EU Issuers Push for Regulated Dollar Stablecoins

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 have argued that demand for dollar-denominated tokens in the region remains strong.

James Bennett, chief executive officer of Stable Mint, addressed the issue in comments to Cointelegraph. Europe, he said, could not "wish away" dollar stablecoins. Bennett added that regulators can still control the safeguards and rules that issuers must follow — authority that EU officials hold under MiCA.

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.

Both executives point to the same conclusion: MiCA's rulebook — the framework now governing USDC's EU oversight — is the bloc's practical lever for dollar stablecoins.

Digital Euro Still Under Development

While issuers and regulators move closer to accepting dollar stablecoins, the European Central Bank continues to work on its own digital currency. Policymakers are still exploring the launch of a digital euro, a central bank digital currency the EU first proposed in 2020.

The digital euro could be issued in 2029, once lawmakers finish the required legislation and a pilot program is completed. Until then, MiCA stands as the EU's operative rulebook for stablecoins already circulating in the bloc, dollar-pegged tokens included.

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 ACPR, the two authorities named in the classification.