The EU's landmark crypto rulebook is getting its first real stress test from the companies it was designed to regulate.
The Summary
- Circle wants the EU to scrap mandatory bank-deposit minimums for stablecoin reserves, arguing for flexible liquidity rules instead as part of MiCA's first major review
- Hyperliquid Policy Center is pushing to bring on-chain perpetual futures under MiFID II, Europe's traditional financial markets framework, rather than MiCA
- Both filings target the European Commission's ongoing MiCA review, signaling that crypto companies are actively shaping regulation rather than just reacting to it
- Circle also wants cross-border co-issuance preserved and a recognition pathway for foreign stablecoins, setting up potential friction with central banks demanding tighter controls
The Signal
Europe's Markets in Crypto-Assets regulation went live in 2023 as the world's first comprehensive crypto rulebook. Now it's getting its first real pressure test. Circle, the issuer of USDC, filed a formal submission arguing that MiCA's requirement for stablecoin issuers to hold a minimum percentage of reserves in bank deposits is too rigid. The company wants flexibility to manage liquidity across different asset types, not just cash sitting in European banks.
This isn't abstract theory. The bank-deposit floor creates concentration risk. If Circle is required to park billions in a handful of EU banks, what happens when one of those banks wobbles? Circle's proposal centers on replacing fixed deposit minimums with broader liquidity requirements that could include short-term government bonds and other highly liquid instruments. The USDC issuer also wants to maintain the ability to co-issue stablecoins across borders, a practice that lets them operate efficiently in multiple jurisdictions without fragmenting reserves.
"Circle wants the EU to replace mandatory bank-deposit minimums with more flexible liquidity rules and preserve cross-border stablecoin issuance."
Meanwhile, Hyperliquid Policy Center filed a separate submission asking the EU to regulate on-chain perpetual futures under MiFID II, the Markets in Financial Instruments Directive that governs traditional derivatives trading. This is a strategic play. MiFID II is mature, well-understood, and comes with decades of case law. MiCA is new, still being interpreted, and comes with the uncertainty that freezes institutional capital.
Hyperliquid's argument is that on-chain perps function economically like traditional derivatives, so they should be regulated under the same framework. If accepted, this would pull a major category of crypto products out of MiCA entirely and into the TradFi regulatory stack. That's either smart regulatory arbitrage or a genuine attempt at harmonization, depending on your view of Hyperliquid's motives.
Key regulatory battlegrounds emerging:
- Bank deposit floors vs. flexible liquidity standards for stablecoin reserves
- MiCA vs. MiFID II as the governing framework for on-chain derivatives
- Cross-border issuance rights vs. localized control demanded by central banks
The timing matters. The European Commission is conducting its first MiCA review, which means these aren't just comment letters disappearing into a bureaucratic void. They're landing during an active revision process when regulators are explicitly looking for what works and what doesn't. Circle and Hyperliquid are both well-capitalized, both have compliance teams that rival small law firms, and both know this is the narrow window to shape the rules before they calcify.
Circle's push for foreign stablecoin recognition also sets up a quiet conflict with European central banks. The European Central Bank and national central banks have been vocal about wanting tighter control over stablecoins operating in the EU, especially dollar-denominated ones. They see stablecoins as a monetary sovereignty issue. Circle sees them as a cross-border payments efficiency issue. Those worldviews don't naturally reconcile.
The Implication
Watch how the European Commission responds to these filings over the next six months. If they accommodate Circle's reserve flexibility request, it signals Europe is willing to compete for stablecoin infrastructure. If they hold the line on bank deposits, it signals they're prioritizing financial stability over capital efficiency, which will push issuers to lighter jurisdictions. If Hyperliquid gets on-chain perps moved to MiFID II, expect every other crypto derivatives platform to file similar requests, fragmenting MiCA's scope before it's even fully implemented. The real test of any regulation is whether the companies being regulated try to leave or try to improve it. Right now, Circle and Hyperliquid are choosing improvement. That won't last if the Commission ignores them.