Europe’s MiCA review turns into a test of stablecoin liquidity and onchain market access

Europe’s review of the Markets in Crypto-Assets Regulation is becoming a live test of how far regulators can adapt existing financial rules to global stablecoins and onchain market infrastructure without reopening the entire rulebook. The debate now spans two connected questions: whether MiCA can keep large dollar stablecoins inside the regulated European perimeter, and whether public blockchains can serve as delivery infrastructure for regulated trading products without changing the legal nature of those products.

Circle’s submission to the European Commission frames the stablecoin side of the review around market depth rather than simply issuer licensing. The company says MiCA has already produced a meaningful base of authorized e-money tokens, with roughly 30 EMTs approved under the framework. But it also argues that the largest global tokens remain only partially captured by the regime: among the top 25 stablecoins by market capitalization, Circle says only USDC, EURC and USDG are currently MiCA-regulated. For European policymakers, that is a warning that authorization counts alone may not translate into competitive liquidity.

The most important issue is multi-issuance. Under that model, a global stablecoin can be issued by both a MiCA-authorized European entity and a foreign-regulated affiliate, allowing the same token network to operate across jurisdictions while keeping European users within MiCA’s consumer-protection framework. Circle argues that restricting this structure would not eliminate demand for dollar stablecoins in Europe. Instead, it could push users toward offshore issuance routes where the protections MiCA was designed to provide are weaker or unavailable.

Reserve policy is the second pressure point. MiCA requires e-money token issuers to hold at least 30% of reserves in commercial bank deposits, rising to 60% for significant EMT issuers. Circle’s response supports reconsidering that fixed deposit floor and replacing it with a more flexible liquidity requirement. Its core argument is that mandatory bank-deposit exposure can increase concentration in banking counterparties rather than reduce risk, especially for large issuers that need to manage high-quality liquid assets at global scale.

The reserve debate matters well beyond USDC. If Europe wants euro and dollar stablecoins to be useful for treasury, payments and market-settlement workflows, issuers need reserves that are both immediately liquid and operationally manageable. Circle also challenges rules that cap single-sovereign exposure and limit reserves held with any one bank counterparty, saying those requirements can force non-euro issuers into complicated reserve structures and dozens of banking relationships. The policy question is whether safety is better served by prescriptive buckets or by a liquidity standard that allows regulated issuers to hold short-duration sovereign assets more efficiently.

In parallel, the Hyperliquid Policy Center’s response focuses on the market-structure side of the same review. Its position is that classification should follow an instrument’s economic features, not the ledger on which it is recorded. For perpetual futures, the group argues that the contracts should sit under MiFID II rather than MiCA because they are standardized, cash-settled derivatives with economic features similar to existing financial instruments. That distinction determines which supervisors oversee the product, which conduct rules apply and how European investors may access global liquidity.

The filing also argues that public blockchains can help regulators meet transparency and recordkeeping goals rather than only creating new risks. Onchain order books can expose trades, funding payments, liquidations and other market events in a continuously verifiable record. That does not remove the need for regulated intermediaries, disclosure standards or suitability controls, but it does challenge the assumption that all supervisory reporting must be recreated offchain after the fact. For RWA markets, this is the same principle driving tokenized funds, collateral and settlement assets: public infrastructure can become a compliance surface if rules recognize what it can verify.

Taken together, the submissions show MiCA moving from launch phase into calibration phase. Europe already has one of the world’s clearest crypto-asset frameworks, but the next round will decide whether that framework can support deep regulated liquidity across stablecoins, tokenized assets and onchain derivatives. If the Commission preserves practical multi-issuance paths, modernizes reserve rules and clarifies that regulated products can use public blockchain infrastructure without losing their legal identity, Europe could strengthen its position as a venue for institutional onchain finance. If it narrows those paths too much, liquidity may continue to form elsewhere while European users reach it through less direct channels.