Crypto Giants Hyperliquid and Circle Press EU for Key MiCA Reforms
This week, crypto industry leaders Circle and the Hyperliquid Policy Center submitted formal feedback to the European Commission, urging critical adjustments to the European Union’s landmark Markets in Crypto-Assets (MiCA) regulation during its ongoing review. The firms aim to reshape how the EU governs stablecoin reserves and decentralized derivatives, warning that current rules could stifle innovation and concentrate systemic risk.
Contextualizing the MiCA Review
MiCA, which began rolling out its first phase in June 2024, represents the world’s first comprehensive regulatory framework for digital assets. As the European Commission reviews the policy’s practical impact, industry stakeholders are leveraging the public consultation window to address unintended operational hurdles before the rules fully crystallize.
Addressing Stablecoin Reserves and Perpetual Contracts
Circle, the issuer of the USDC stablecoin, is targeting MiCA’s strict bank deposit mandate. Under current rules, stablecoin issuers must keep at least 60% of their reserve assets in European bank deposits. Circle argues this concentration requirement increases systemic risk by exposing stablecoins to bank failures, advocating instead for highly liquid, low-risk instruments like short-term government bonds.
Meanwhile, the Hyperliquid Policy Center is focusing on derivatives, specifically perpetual contracts (perps). Hyperliquid urges regulators to classify perps under the existing Markets in Financial Instruments Directive (MiFID II) rather than MiCA. They argue that applying MiCA to these complex instruments would create regulatory misalignment and disadvantage European traders in the global decentralized finance (DeFi) market.
What Lies Ahead for EU Crypto Regulation
The European Commission’s response to these consultations will signal whether the EU is willing to adapt its rigid framework to accommodate market realities. Industry analysts are closely watching whether regulators will ease the bank deposit floor for stablecoins or maintain their conservative stance to protect traditional banking infrastructure.
