Circle Calls for MiCA Reform to Allow Global Stablecoins Back Into Europe

Circle's EU policy head Patrick Hansen has proposed an equivalence framework under MiCA that would allow foreign stablecoin issuers, including Tether, to access European markets without establishing a separate licensed EU entity. The proposal comes after Tether's USDT was delisted from several European exchanges rather than comply with MiCA's reserve and licensing requirements.

Hansen estimates approximately 99% of stablecoins originate outside the EU, meaning MiCA's current structure, which requires a licensed EU entity, applies to only a small fraction of the global stablecoin market.

Tether's return to Europe remains unlikely in the near term: the company is headquartered in El Salvador, has not obtained approval under the new U.S. stablecoin framework, and launched a separate U.S.-focused stablecoin rather than modify USDT.

The EU already applies equivalence decisions in banking, insurance, and financial market infrastructure, including recognition of UK clearing houses in January 2025, but has never extended this mechanism to stablecoins.

Political resistance tied to monetary sovereignty concerns and the ECB's digital euro initiative poses a significant challenge to any MiCA reform that would ease access for dollar-backed stablecoins.

Tether’s decision to step away from the European market rather than comply with the European Union’s stablecoin regulations has reignited discussions over whether the bloc needs a more flexible approach. A proposal from a senior Circle executive suggests that introducing an equivalence framework could offer a solution and potentially allow global stablecoin issuers to return without creating separate EU-specific tokens.

The concept would enable the EU to recognize regulatory frameworks from other jurisdictions if they meet comparable standards, reducing the need for foreign issuers to establish a separate licensed entity inside the bloc.

MiCA’s Stablecoin Rules Create Barriers for Global Issuers

The EU’s Markets in Crypto-Assets Regulation (MiCA) represents the region’s main regulatory framework for digital assets, with its stablecoin requirements reaching their final implementation deadline on July 1.

However, the framework lacks a mechanism that allows European regulators to recognize rules applied to issuers in other countries. As a result, companies seeking access to European users must establish a licensed entity within the EU.

Patrick Hansen, Circle’s head of EU policy, described this approach as a challenging entry path, noting that the vast majority of stablecoins are issued outside Europe.

According to Hansen, around 99% of stablecoins originate from outside the EU, meaning MiCA’s current structure applies to only a limited portion of the global market.

"Equivalence is emerging as a compelling alternative to the multi-issuance model", Hansen said, arguing that it could provide another regulatory route for international stablecoin issuers.

Tether’s USDT Faces Challenges Under MiCA Compliance Rules

Tether’s USDT, the world’s largest stablecoin by market capitalization, is at the center of the debate. With a market value of roughly $184 billion, USDT faces challenges under MiCA requirements, including rules requiring major issuers to hold a significant share of reserves within European banks.

Instead of adjusting its reserve structure, which is largely backed by U.S. government debt, Tether allowed USDT to be removed from several European exchanges rather than modify its operating model.

An equivalence system could potentially change this dynamic by allowing European regulators to recognize Tether’s existing framework instead of requiring a separate EU-issued version of USDT.

However, Tether’s return to Europe remains uncertain. The company is now headquartered in El Salvador and has not yet obtained approval under the new U.S. stablecoin framework. It also chose to launch a separate U.S.-focused stablecoin rather than modify USDT, making a rapid comeback in Europe unlikely.

Circle’s USDC Takes a Different Regulatory Path

Unlike Tether, Circle followed a compliance-focused strategy by obtaining a French license in 2024, allowing its USDC stablecoin to remain accessible within the European market.

Because Circle is already aligned with MiCA requirements, an equivalence model would likely provide greater advantages to competitors that currently face regulatory barriers.

EU Already Uses Equivalence in Other Financial Sectors

The idea of regulatory equivalence is not new in Europe. The EU already applies similar approaches in sectors such as banking, insurance, and financial market infrastructure.

For example, the bloc granted recognition to UK clearing houses through an equivalence decision in January 2025. However, this approach has never been extended to stablecoins.

Implementing equivalence for digital assets would require changes to MiCA, with the regulatory review launched by the EU in May 2026 potentially becoming a key opportunity to reconsider the current framework.

Stablecoin Regulation Faces Political and Monetary Challenges

Despite the potential benefits, introducing equivalence for stablecoins faces political obstacles. Most major stablecoins are linked to the U.S. dollar, raising concerns in Europe over financial dependence and monetary sovereignty.

The European Central Bank is also advancing work on a digital euro, adding another layer to the debate over the role of private dollar-backed stablecoins within the European financial system.

Europe Faces a Choice Between Control and Global Competition

The debate around stablecoin equivalence highlights a broader regulatory challenge for Europe: how to protect financial stability while remaining competitive in a rapidly evolving digital asset market.

A stricter framework may give regulators greater control but risks limiting access to global innovation and pushing activity toward other jurisdictions. On the other hand, a carefully designed equivalence model could allow Europe to maintain oversight while integrating with the wider global stablecoin ecosystem.

The outcome of MiCA’s review could determine whether the EU continues prioritizing a closed regulatory model or moves toward a more interoperable approach that recognizes the international nature of digital assets.