EU Banking Authority Classifies Circle's USDC as First 'Significant' E-Money Token Under MiCA
Key Takeaways
- •The EBA has designated Circle's USDC as the first stablecoin to be classified as a 'significant' e-money token under the EU's MiCA framework.
- •USDC will now be jointly overseen by the EBA and France's Autorité de Contrôle Prudentiel et de Résolution, covering its authorization and reserve requirements.
- •With a market capitalization of $73 billion, USDC ranks as the second-largest stablecoin, behind Tether's USDt at $184 billion.
- •EU-based issuers have advocated for regulated US dollar-pegged stablecoins, arguing that euro stablecoins alone cannot support corporate cross-border payments.
- •The European Central Bank continues to explore a digital euro, first proposed in 2020, with potential issuance as early as 2029 following legislation and a pilot program.
The European Banking Authority (EBA) has classified Circle's USDC stablecoin as a "significant" e-money token under the European Union's Markets in Crypto-Assets (MiCA) framework, making it the first such token to receive the designation and placing it under joint supervision by European and French authorities.
In a notice published Wednesday, the banking regulator said the e-money token classification — granted so far to only 45 other projects — now carries added weight for USDC as the first to be deemed significant. Under the framework, the stablecoin will be jointly overseen by the EBA and France's supervisory authority, the Autorité de Contrôle Prudentiel et de Résolution. The regulator detailed the decision in an official press release.
MiCA, the bloc's sweeping crypto-asset rulebook that took full effect at the end of 2024, requires issuers of e-money tokens to be authorized and to back their tokens with reserves. For Circle, the classification places USDC's authorization and reserve requirements within the remit of both the EBA and France's supervisory authority, making the division of oversight a key feature of the token's status in the EU.
The designation reflects the token's scale. USDC, issued by Circle, is the second-largest stablecoin by market capitalization at $73 billion, according to the notice, compared with $184 billion for Tether's USDt.
The "significant" classification came as many EU-based token issuers pushed for regulated, US dollar-pegged stablecoins to operate in the region. James Bennett, CEO of Stable Mint, told Cointelegraph that while Europe could not "wish away" dollar stablecoins, regulators could control the safeguards and rules imposed on issuers.
"For European corporates to make cross-border payments globally, offering only a euro stablecoin isn't enough," AllUnity CEO Alexander Höptner told Cointelegraph.
As authorities and issuers move closer to embracing dollar-pegged tokens, policymakers at the European Central Bank continue to explore the potential introduction of a digital euro. The EU authority first proposed the central bank digital currency in 2020, and the coin could be issued in 2029 once legislation and a pilot program are concluded.
Related: Qivalis wins Dutch e-money license for euro stablecoin.
