EBA names USDC first significant e-money token

At a glance

The EBA has classified USDC, issued in the EU by Circle Internet Financial Europe SAS, as a significant e-money token. It is the first of the 45 e-money tokens notified under MiCA to get that label.
From 12 November, the EBA supervises USDC’s own funds, reserve of assets, liquidity and recovery and redemption plans. France’s ACPR keeps governance, ownership and fit-and-proper checks.

The European Banking Authority said on Wednesday it had classified USDC as a significant e-money token under the Markets in Crypto-Assets Regulation, in a press release.

An e-money token, or EMT, is MiCA’s term for a stablecoin pegged to a single official currency, such as USDC to the dollar. “Significant” is a label for tokens that have grown large enough to matter across the bloc. The EBA assesses the criteria in Commission Delegated Regulation (EU) 2024/1506 and reviews the label every year. Finance Magnates reported that a token needs to meet at least three of seven criteria, which include more than 10 million holders and more than €5 billion in issued value or reserve.

USDC had about $72.8 billion in circulation worldwide at 03:54 UTC on Thursday, according to DefiLlama, against about $183.9 billion for Tether’s USDT. Circle’s euro token, EURC, had about €490 million in circulation and is not named in the EBA’s decision.

Two supervisors from 12 November

Under the arrangement MiCA calls dual supervision, the EBA will directly supervise USDC’s own funds, its reserve of assets, its liquidity requirements and its recovery and redemption plans, taking those areas over from the Autorité de Contrôle Prudentiel et de Résolution (ACPR), France’s banking supervisor. The ACPR will remain responsible for governance, qualifying holdings, fit-and-proper assessments, outsourcing and conflicts of interest, the EBA said. The two authorities will work together on the handover.

The EBA has also signed a memorandum of understanding with the New York State Department of Financial Services to share information on cross-border stablecoin activity. USDC is issued in the EU by Circle’s French entity and in the United States by Circle Internet Financial, LLC.

Circle has lobbied on the reserve rules that the EBA will now supervise. Earlier this month it asked the EU to drop MiCA’s requirement that a large share of reserves sit in bank deposits, as covered in Circle’s push to change MiCA’s reserve rules. Last week the markets regulator ESMA told licensed firms to stop serving stablecoins that lack MiCA approval, in ESMA’s order on non-MiCA stablecoins.

What it changes for users

For people holding or paying with USDC in the EU, nothing in the EBA’s notice changes how the token works or how it is redeemed. What changes is who checks the reserve. From 12 November, an EU-level supervisor rather than a national one will examine whether the assets backing USDC, and Circle’s plans for paying holders out in a crisis, meet MiCA’s rules.

For exchanges and payment firms in the EU, USDC remains a MiCA-authorised token they can offer. The basics of what that means are in what a MiCA-compliant stablecoin is.

What to watch: the EBA reassesses significance every year, and the first supervisory work under the new split begins on 12 November.

This article is for information only and is not investment advice.