Key takeaways
- Circle has urged the EU to amend MiCA, stating that only three of the thirty largest stablecoins currently comply with it.
- Separately, reporting indicates around 50,000 Europeans have petitioned the EU to ease MiCA's restrictions on paying rewards or yield on stablecoin holdings.
- The low compliance figure is not mainly about reserve quality. It reflects requirements on authorisation, redemption rights, reserve location and the prohibition on interest, which together exclude most existing issuers.
- For EU and UK readers this is the most practically consequential regulation in crypto right now, because it determines which stablecoins you will actually be able to hold through a regulated venue.
Circle has publicly urged the European Union to amend MiCA, and the figure it used is worth sitting with: of the thirty largest stablecoins by size, three currently comply.
Separately, reporting indicates roughly 50,000 Europeans have signed a petition asking the EU to relax MiCA's restrictions on paying rewards on stablecoin holdings.
Both items point at the same thing. MiCA is now the most practically consequential piece of crypto regulation in force anywhere, and most of the industry does not meet it.
What MiCA actually requires of a stablecoin
The compliance figure sounds like an indictment of reserve quality. It mostly is not. The requirements that exclude issuers are structural.
Authorisation as an issuer. You must be authorised in the EU — as a credit institution or an electronic money institution. That is not a disclosure obligation, it is a licence, with capital requirements and ongoing supervision. An issuer incorporated elsewhere with no EU entity cannot satisfy it by publishing better attestations.
Reserve composition and location. Reserves must be held in specified low-risk instruments, and a defined proportion must sit with EU credit institutions. An issuer holding entirely US Treasury bills with US custodians fails this regardless of how sound those reserves are.
Redemption at par, always. Holders must be able to redeem at face value, at any time, without fees. Many issuers restrict direct redemption to large institutional clients, with retail holders using exchanges instead. Under MiCA that is not sufficient.
No interest. Issuers are prohibited from paying interest on holdings. This is the one driving the petition, and it is a deliberate choice: it keeps a payment token from functioning as a deposit, because deposits are a banking activity with its own protections.
Why the third requirement matters more than it sounds
The redemption rule deserves attention because it is the one that most directly affects you.
We wrote about the Fed's proposed 24-hour reserve clock and noted a distinction then: most retail holders do not redeem with the issuer, they sell on an exchange. That means in a stress event there is a venue between you and the backing, and venues act in their own interest under stress.
MiCA's response is to require that the right to redeem at par exist for every holder, directly, without fees. That is a genuinely stronger consumer protection than anything in the equivalent US framework, and it is also exactly why issuers with institution-only redemption cannot comply without rebuilding their operations.
The interest prohibition, and the honest case on both sides
Fifty thousand signatures is a real number, and the argument deserves to be stated fairly before it is assessed.
For easing it: a holder's euros sit in reserves earning a return that the issuer keeps entirely. Users bear the inflation cost of holding a non-interest-bearing instrument while somebody else earns the yield on their money. Prohibiting rewards also pushes Europeans toward non-compliant offshore alternatives that offer them, which is worse on every axis the regulation cares about.
For keeping it: once an instrument pays interest, it functions as a deposit. Deposits are regulated as banking because of what happens when many people want their money simultaneously — and deposit insurance, capital requirements and lender-of-last-resort access exist for that reason. A yield-bearing stablecoin has the run risk of a deposit without those protections, and the Fed's proposed hours-long crisis clock is a recognition that run dynamics in this asset class are faster than in banking.
Both positions are coherent. The resolution will probably not be a simple yes or no but a licensed category that can pay yield under bank-like conditions, which is roughly how money market funds ended up regulated.
What this means for you practically
If you are in the EU or UK, three concrete consequences.
Availability will narrow before it widens. Regulated European venues must restrict non-compliant tokens. Some stablecoins you currently hold may become unavailable to buy, or trading pairs may be withdrawn, with notice periods that are short in practice.
Check which of your holdings are compliant, and do it now rather than at the deadline. That status is published by issuers and by the venues listing them. This is a ten-minute check that prevents a forced conversion at a moment you did not choose.
And remember the UK runs a separate clock. We noted the FCA authorisation window with a February deadline ahead of a 2027 regime. UK and EU rules are not the same thing, so a token's EU status does not settle its UK availability.
Elsewhere: a recovery pool worth noting
DFX has gone live allowing affected Drift users to claim one token per dollar lost, starting from a pool reported at $3.11 million. Worth flagging because it is a mechanism we have not covered: tokenising a claim on future recovery rather than paying cash.
Assess it the way we described for tokenised assets generally — the token is a claim, and what it is worth depends entirely on what the pool is funded by and whether that funding is contractual or discretionary. A token representing a share of future revenue is a different instrument from one representing segregated assets already set aside.
Also notable: the Fed's Jefferson has signalled an October rate pause, with hike odds falling. As we covered, this is the input that moves crypto most reliably at present, and it does so through expectations rather than through any protocol.
The market
Bitcoin is around $84,600, up roughly 1.3% on the day and broadly flat over the week. Ether is near $2,699. Reporting also notes Bitcoin ETF flows are around $5 billion short of a new record after what it describes as an eleven-month reset — a reminder that flow figures describe what has happened rather than what comes next.
What to take from this
Three of the thirty largest stablecoins comply with the EU's framework. That is not a story about bad reserves. It is about authorisation, where reserves sit, who can redeem, and whether yield is permitted — structural requirements that most existing issuers were not built around.
For anyone holding stablecoins in Europe, the practical question is not whether MiCA is well designed. It is which of your holdings are on the compliant list, and checking that before a venue decides for you.
Frequently asked questions
Why do so few stablecoins comply with MiCA?
Mostly for structural rather than quality reasons. MiCA requires the issuer to be authorised in the EU as a credit or electronic money institution, a defined share of reserves to sit with EU credit institutions, redemption at par available to every holder without fees, and no interest paid on holdings. An issuer with excellent reserves held entirely in the US, offering redemption only to large institutions, fails several of those regardless of soundness.
What does the no-interest rule actually prohibit?
It prevents the issuer paying a return on holdings. The reasoning is that an instrument paying interest functions as a deposit, and deposits are regulated as banking because of run risk — with deposit insurance and capital requirements attached. A yield-bearing stablecoin would carry deposit-like run dynamics without those protections. Around 50,000 Europeans have petitioned to ease this, and the counter-argument is genuinely strong too.
Could a stablecoin I hold become unavailable?
Yes. Regulated European venues must restrict non-compliant tokens, so pairs can be withdrawn or purchases disabled, sometimes with short practical notice. This is why checking the compliance status of what you hold now is worthwhile — it is published by issuers and venues, takes minutes, and prevents a forced conversion at a time you did not choose.
Does MiCA compliance mean a stablecoin is safe?
It means it meets a defined regulatory standard on authorisation, reserves, redemption and disclosure, which is meaningfully better than no standard. It does not eliminate risk. The issuer can still fail, reserves can still be marked down in a stress event, and operational problems can still occur. Compliance narrows the range of failure modes rather than removing them.
Do UK rules work the same way?
No, and this catches people. The UK has its own regime with an FCA authorisation window and a February deadline ahead of 2027 implementation. A token's EU status does not determine its UK availability, and firms serving UK customers need separate permission. Check the regime that applies where you are resident.
Not financial advice. Crypto assets are volatile and unregulated in many jurisdictions. In India, gains are taxed at 30% with 1% TDS on transfers. Do your own research and never invest money you cannot afford to lose.
Editorial note: Crypto Shakti uses an AI-assisted research and drafting workflow. Every article is grounded in the linked primary sources and live market data captured at publication time.