European Entity Steps Up Reserves Amid EBA Supervision Transfer ahead of Nov 12 Handover

The European Banking Authority announced on October 14 that USDC issued by Circle Internet Financial Europe SAS has become the European Union’s first significant e‑money token under the EU’s Markets in Crypto‑Assets Regulation (MiCA). This designation paves the way for a November 12 transfer of key supervisory duties from France’s financial regulator to the EBA.

The EBA will now assume direct oversight of the EU issuer’s own funds, encompassing regulatory capital, reserve management, liquidity requirements, and recovery and redemption plans.

Meanwhile, France’s Autorité de Contrôle Prudentiel et de Résolution (ACPR) retains certain responsibilities, including governance supervision, scrutiny of qualifying holdings, fit‑and‑proper assessments, and oversight of outsourcing arrangements and conflicts of interest. The two regulators will coordinate closely during the transition period.

This arrangement grants the European agency direct involvement in safeguarding EU‑issued USDC, while French national supervision continues over other operational facets.

Under MiCA, EBA supervision applies to significant e‑money token issuers classified as electronic money institutions for compliance with Articles 55 and 58 of the regulation. These provisions mandate specific recovery and redemption planning mechanisms, along with enhanced reserve, liquidity, and own‑funds obligations.

Article 54 establishes a baseline requiring credit institutions to hold at least 30 % of receipts from e‑money tokens in separate accounts; the remaining balance must be invested in designated safe, low‑risk, highly liquid instruments denominated in the token’s reference currency.

In contrast to traditional bank‑deposits, the proposal targets only digital wallet holdings. Separate entities issue USDC in the Eurozone and United States, and each adheres to distinct reserve allocations. The overall global circulation figure does not reflect the European issuer’s local reserve portfolio; however, the EBA urges preservation of multi‑issuance structures and formalization of safeguard mechanisms, including dynamic rebalancing between international and EU‑specific reserves.

Cross‑border supervision is also being strengthened. The EBA has signed a memorandum with the New York State Department of Financial Services to improve collaboration and information sharing regarding stablecoin activities.

Importantly, the announcement contains no peg guarantee, new insurance provision, or directive for automatic fund movements or changes in redemption terms. USDC’s white paper similarly excludes EU deposit guarantees and investor compensation coverage.

Key dates to watch include November 12, when the specified supervisory responsibilities move to the EBA; this timeline also frames ongoing discussions around Circle’s proposed adjustments to reserve frameworks aimed at reducing reliance on bank‑deposit backing.

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