Direct supervision of Circle's European operations by the European Banking Authority (EBA) takes effect today, November 12, following the regulator's October 14 decision to classify USDC as the European Union's first significant e-money token under MiCA (official press release).

Under the handover, the EBA now oversees Circle Internet Financial Europe SAS's own funds, reserve, liquidity, and recovery and redemption planning, while France's ACPR retains responsibility for governance and ownership. Coindoo previously walked through that division of labor.

Of the 45 e-money tokens notified under MiCA, USDC is the only one to cross the significance threshold. The EBA has not disclosed which of the regulation's seven criteria the token met; three are enough.

The change is one of supervisor, not a finding against Circle, and nothing in the announcement points to an inspection, penalty, or reserve shortfall. What it does alter is who gets to ask the questions the public reserve report was never designed to answer.

What the September Report Measured — and What It Left Out

Circle's latest USDC examination report, dated October 26, tests a single assertion: that reserve assets were worth at least as much as the USDC in circulation at 23:59 UTC on September 4 and September 30. Independent accountants provided reasonable assurance on that claim under AICPA attestation standards.

As of September 30, the figures showed roughly $73.96 billion in reserves against 73.88 billion USDC in circulation — a surplus of about $78 million, or roughly 0.1%.

Three things sit outside that test. First, the report covers the US and French issuers together, so it does not show how much of the reserve backs the tokens Circle France has put into circulation. Second, it says nothing about the capital Circle France itself holds, because the accountants were not asked. Third, it captures two midnight snapshots rather than how quickly those assets could be turned into cash if large numbers of holders sought redemption at once.

The EBA's remit covers the French entity only. Circle Internet Financial, LLC — the US issuer — is regulated in New York, which is why the two supervisors now need each other.

The 3% Capital Test the Surplus Cannot Answer

Article 58 of MiCA requires an e-money institution issuing a significant token to follow the own-funds rule written for significant asset-referenced tokens: own funds of at least 3% of the average amount of the reserve, up from the 2% that applies to non-significant issuers. On a €1 billion reserve, that means €30 million of the issuer's own capital. The EBA's technical standards give an issuer a procedure and up to three months to step up to the higher level after classification.

Own funds are the issuer's equity, held on its own balance sheet in the same high-quality form banks must use. They are not the reserve, and they are not the gap between the reserve and the tokens. The $78 million surplus in the September report belongs to the backing; it says nothing about whether Circle France holds the capital MiCA requires. That is the first question the EBA can now put directly — and the first number holders will not see in any attestation.

Liquidity: Policies and Stress Tests, Not Balances

The same article pulls Circle France into MiCA's liquidity regime for significant issuers. The company must maintain a liquidity management policy with procedures for meeting redemption requests and must run regular liquidity stress tests. From the date of the classification decision, its reserve must also be independently audited every six months, rather than on the standard annual cycle applied to non-significant issuers.

Those documents address the question a treasurer holding USDC actually asks before a large payment: not whether the assets were there at midnight on September 30, but what happens if many holders want dollars on the same morning. A reserve can be fully valued and still take time to convert. Stress-test results, redemption procedures, and the recovery and redemption plans the EBA now reviews provide that evidence — and none of it appears in the monthly report.

What Remains Public — and What Does Not

Most supervisory findings will stay confidential. The public record comprises:

• Monthly examination reports
• The MiCA crypto-asset white paper
• EBA significance decisions, reviewed yearly
• Any published enforcement decision

The supervisor's file, by contrast, holds:

• Own-funds calculations
• Liquidity stress-test results
• Six-monthly reserve audits
• Recovery and redemption plans
• Inspection and investigation records

How the EBA Gets at the Evidence

MiCA gives the EBA three avenues. It can issue a binding decision requiring an issuer to hand over information it needs; unlike an informal request, such a decision is enforceable and open to challenge in court. It can investigate records, procedures, and explanations. And it can carry out on-site inspections at the issuer's premises, with legally privileged material protected. The EBA describes its supervisory model as continuous off-site monitoring combined with targeted on-site work on specific risk areas.

If supervision uncovers an infringement, the regulation allows the EBA to order the conduct to stop, impose fines, and apply periodic penalty payments, each under its own procedure.

Because the reserve is shared with a US issuer, the EBA also needs what New York knows — the two supervisors now depend on each other.