10-20-2026 
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TL;DR: The EBA named USDC the EU’s first “significant” stablecoin under MiCA, with supervision of its reserves and capital starting November 12. Circle is defending its revenue-sharing model and expanding into about 50 emerging markets ahead of its November 4 earnings.
Key Takeaways:
- USDC named as first ‘significant’ stablecoin under EU’s MiCA rules.
- Significant issuers must hold 60% of their reserves in cash at EU banks, compared with 30% for others.
- Circle asked the European Commission to replace these rules with a “less rigid minimum asset liquidity requirement.”
- Circle defends USDC economics: Partners received $819 million (~59%) of its $1.4 billion H1 revenue.
- Circle plans to expand into about 50 emerging economies, backed by a $100 million Binance stake.
USDC has gone down in history as the European Union’s first ‘significant’ stablecoin, while USDC issuer Circle (NASDAQ: CRCL) is defending the economics behind its primary moneymaker.
On October 14, the European Banking Authority (EBA) officially slapped a ‘significant’ designation on USDC, the primary stablecoin issued by U.S.-based Circle. This marks the first such classification issued to an ‘e-money token’ (EMT) under the European Union’s Markets in Crypto Assets (MiCA) regulation and imposes significant obligations on Circle and the France-based subsidiary that issues USDC for use in the EU.
As of November 12, the EBA will take over supervision of USDC’s reserve assets, capital, liquidity requirements, and recovery and redemption plans. These functions are currently overseen by the French regulator Autorité de Contrôle Prudentiel et de Résolution (ACPR), which will continue to oversee the less glamorous aspects of Circle’s French subsidiary, Circle Internet Financial Europe SAS.
In June, the EBA signed a memorandum of understanding with the New York State Department of Financial Services (NYDFS) to facilitate the exchange of information and coordinate supervisory activities of stablecoins issued in both New York and the EU. New York is home to Circle’s global headquarters.
Under MiCA, stablecoins/EMTs are deemed ‘significant’ if they meet three of seven criteria, including having over €5 billion (US$5.6 billion) in reserves, over 10 million users, or processing daily volume exceeding €500 million ($561 million). USDC’s market cap currently stands at just over $72 billion.
Significant EMT issuers are required to maintain 60% of the token’s financial reserves in cash in EU banks, twice the 30% rate imposed on lesser EMTs. Significant issuers are also required to maintain capital requirements of 3% of average reserve assets, versus 2% for their insignificant cousins. Significant issuers can also face significantly greater financial penalties for infringement of MiCA rules.
Some EU institutions have suggested that these hurdles could be lowered in the coming years as MiCA’s overall impact on market activity becomes clearer. The Bank of England (BoE), which is still mulling over its own digital asset regulatory regime, has suggested it might also reconsider requirements for its ‘systemic’ stablecoins.
On October 1, Circle filed its response to the European Commission’s MiCA Review Consultation, and included a plea that the significant reserve requirements be “reconsidered and replaced with a less rigid minimum asset liquidity requirement.”
There are 30-plus MiCA-approved EMTs, but Circle noted in its submission that of the top-25 stablecoins by market cap, only three are currently MiCA-regulated, and Circle issues two of them: USDC and the euro-backed EURC. (The third is the Global Dollar consortium’s USDG.)
The European Central Bank (ECB) and other bodies have repeatedly expressed concern that dollar-backed tokens could undermine the EU’s monetary sovereignty. As such, it must stick going down that the first ‘significant’ EMT is one backed by greenbacks, but all euro-backed tokens combined have a market cap of just $900 million, less than 0.3% of the overall stablecoin cap.
Circle defends USDC economics, plots emerging/developing market expansion
One week before the EBA announcement, Circle announced a tie-up with SAP-backed financial services company Tereina to incorporate both USDC and EURC into its payments infrastructure. Tereina specializes in adding agentic AI payment capabilities to an enterprise’s existing business applications and financial workflows, enabling easier access to Circle’s stablecoin infrastructure, starting with the SAP Cloud ERP (enterprise resource planning) system.
Last Friday, October 16, Circle’s chief commercial officer, Kash Razzaghi, issued a blog post on The Economics of USDC and Why Our Partners Win. Circle has been on the defensive since July, when the stablecoin world was buzzing over the new dollar-backed kid on the block, OpenUSD’s OUSD, which promised to share income generated from its reserves with its partners.
Razzaghi’s post gets right to it, saying “new entrants have claimed they can build a more ‘useful’ stablecoin” than issuers who, among other sins, “keep too much of the economics” and make redemptions too expensive. Razzaghi claimed this pitch is “intriguing” but also “misrepresents how USDC works today and drastically underestimates what it takes to make a stablecoin useful.”
Razzaghi said that “for years,” Circle has shared “the majority of USDC’s economics with the partners that drive its adoption.” Circle partners, including the Binance, Coinbase (NASDAQ: COIN), and OKX digital asset exchanges, received $819 million (~59%) of Circle’s total H1 revenue of $1.4 billion, via what Circle calls ‘distribution and transaction costs.’
Razzaghi said Circle reinvests 34¢ of every revenue dollar in the company, leaving just 7¢ in net income. Razzaghi said this reinvestment “is what makes USDC useful,” and what stablecoin users need to ask themselves is how much reserve income “can be shared while continuing to fund the infrastructure that makes the stablecoin useful in the first place.”
Furthermore, “all Circle customers have always been able to redeem for free through standard rails, with settlement in up to two business days.” Redemption is free for customers who move USDC over the Circle Payments Network or build on the Circle Platform.
Razzaghi claims “no other stablecoin issuer processes fiat redemptions at a comparable scale” to Circle, citing Q1 stats in which the company redeemed $71.8 billion in USDC, “roughly 90% of the total supply in circulation at the time.”
While Razzaghi was defending Circle’s honor online, Circle CEO Jeremy Allaire was in Bangkok at the IMF/World Bank meetings, where he told Reuters that his company is going through “a transition point right now … moving from the early adopter phase of blockchain technology into the mainstream scaling phase.”
This scaling will see Circle expand its operations into ~50 emerging and developing economies (EMDEs) across Latin America, the Middle East, and Southeast Asia. Circle recently acquired Tazapay, a Singapore-based cross-border payments remittance firm that does 60% of its $25 billion annual volume in stablecoins.
Last month, Binance took a $100 million stake in Circle and promised to boost promotion of USDC, “especially across emerging markets.” That puts Circle on yet another collision course with Tether, issuer of the market-leading USDT stablecoin, which has made EMDEs a key focus of its expansion (in part to Tether’s historic aversion to mature markets with stricter regulations, like the EU).
Circle’s Q3 financial report card will be issued on Wednesday, November 4.
FAQs:
What does “significant” mean for USDC under MiCA?
It means USDC met at least three of MiCA’s seven criteria. This brings direct EBA oversight and stricter reserve and capital rules.
When does the EBA take over USDC supervision?
November 12. The EBA will oversee USDC’s reserves, capital, liquidity, and redemption plans.
What reserve rules apply to significant stablecoins?
Issuers must hold 60% of reserves in cash at EU banks, versus 30% for others, plus 3% capital versus 2%.
How much revenue does Circle share with partners?
Partners like Binance, Coinbase, and OKX received $819 million, accounting for about 59% of Circle’s $1.4 billion in H1 revenue.
Watch | MiCA and the Future of Stablecoins: What Comes Next for Tether?
