EU Designates Circle's USDC as First Significant Stablecoin Under MiCA
Key Takeaways
- •The EBA designated Circle's USDC as the EU's first significant e-money token under MiCA, making it the first of 45 notified tokens to receive the classification, with effect from November 12, 2026.
- •Oversight will be divided between the EBA, responsible for reserves, capital, liquidity and recovery arrangements, and France's ACPR, which keeps authority over governance and operational controls.
- •The EBA and the New York State Department of Financial Services signed a memorandum of understanding to exchange supervisory information on USDC's cross-border operations.
- •A French 2027 budget amendment would tax conversions of cryptocurrencies into qualifying stablecoins as taxable disposals at a 31.4% flat rate starting January 1, 2027, subject to further parliamentary approval.
- •The Qivalis euro stablecoin consortium has expanded to 37 financial institutions across 15 countries and aims to launch in the second half of 2026, pending authorization from the Dutch Central Bank.
The European Banking Authority (EBA) has Circle's USDC as the European Union's first significant e-money token under the Markets in Crypto-Assets Regulation (MiCA), placing one of the world's largest dollar-backed stablecoins under direct EU-level supervision.
The designation, issued on October 14, takes effect on November 12, 2026, when responsibility for USDC's capital requirements, reserves, liquidity management and recovery arrangements transfers to the EBA. France's Autorité de Contrôle Prudentiel et de Résolution (ACPR), which currently supervises Circle's European issuing entity, will retain authority over governance, management suitability, outsourcing and conflicts of interest.
USDC is the first of 45 e-money tokens notified under MiCA to receive the significant classification. Under the regulation, an e-money token is deemed significant once it crosses thresholds tied to its holder base, market capitalisation, transaction volumes and related criteria, placing prudential oversight of the regime's largest tokens at EU level with the EBA.
Dual Supervision for a Dual-Issuer Structure
Circle issues USDC in the European Union through Circle Internet Financial Europe SAS, its French-regulated electronic money institution, and separately in the United States through Circle Internet Financial LLC. The new classification formalizes a dual-supervision structure that divides oversight between EU and French regulators.
The EBA will monitor the financial safeguards underpinning USDC, including the assets backing tokens in circulation, issuer capital, liquidity requirements and redemption arrangements, while the ACPR continues to supervise corporate governance and operational controls.
To coordinate oversight of USDC's international operations, the EBA has signed a memorandum of understanding with the New York State Department of Financial Services, allowing the two regulators to exchange supervisory information.
Circle already issues MiCA-compliant USDC and EURC in Europe under stablecoin rules that have applied across the bloc since June 2024, so the designation layers additional supervisory requirements onto an existing authorization rather than granting a first license. It also sets Circle apart from competitors such as Tether, whose chief executive has rejected MiCA's reserve requirements, citing concerns that the rules would concentrate stablecoin backing assets within European banks.
France Weighs 31.4% Tax on Crypto-to-Stablecoin Swaps
The supervisory decision lands as French lawmakers debate changes to the tax treatment of converting cryptocurrencies into stablecoins. An amendment to France's 2027 budget, adopted by the National Assembly's Finance Committee on October 7, proposes treating exchanges into MiCA-defined e-money tokens as taxable disposals.
Under the proposal, converting Bitcoin or another cryptocurrency into a qualifying stablecoin could trigger capital gains taxation without any conversion into traditional fiat currency. The standard flat rate is currently 31.4%, applied to taxable gains rather than the entire transaction value. If enacted, the changes would take effect on January 1, 2027. They have not yet become law and remain subject to further parliamentary approval.
European Banks Build a Euro Alternative
European financial institutions are simultaneously developing alternatives to dollar-denominated stablecoins. The Qivalis euro stablecoin project has grown to 37 participating financial institutions across 15 countries, including ING, BNP Paribas, UniCredit, BBVA and ABN AMRO. Its May expansion added 25 banks, extending the consortium's planned distribution network across the continent.
Qivalis intends to issue a euro-denominated token backed 1:1 by reserves, targeting institutional payments, blockchain settlement and tokenized financial markets. The project remains in the authorization process with the Dutch Central Bank and has targeted the second half of 2026 for launch, subject to regulatory approval.
For Circle, the next confirmed regulatory milestone falls on November 12, 2026, when the EBA formally assumes its designated supervisory responsibilities for USDC. Elsewhere in the European stablecoin landscape, the French tax amendment's remaining parliamentary steps and Qivalis's authorization review with the Dutch Central Bank are the pending items to watch.
Source: Crypto Adventure
