EBA puts USDC under joint EU and French supervision

The European Banking Authority has classified Circle’s USDC as the European Union’s first significant e-money token, bringing key parts of its supervision to EU level from 12 November. The EBA said in its 14 October announcement that 45 e-money tokens have been notified under the bloc’s crypto rules, known as MiCA, and USDC is the first to receive this status.

USDC is a stablecoin, a crypto token designed to keep a steady value against a currency. In the EU, it is issued by Circle Internet Financial Europe SAS. The classification means the EBA and France’s Autorité de Contrôle Prudentiel et de Résolution (ACPR) will share oversight. The decision matters because it shifts responsibility for key financial safeguards from France’s regulator to the EU authority.

What will change on 12 November?

From that date, the EBA will take over supervision of Circle Europe’s own funds, reserve of assets, liquidity requirements, and recovery and redemption plans for USDC. These are areas that concern the resources backing the token and how it can be redeemed.

The ACPR will keep responsibility for governance, major shareholdings, assessments of whether key people are suitable for their roles, outsourcing, and conflicts of interest. The EBA says it will work with the ACPR on the handover. The two regulators will therefore have different responsibilities, rather than the EBA taking over all supervision.

Why does MiCA call USDC “significant”?

MiCA gives the EBA a role in deciding whether e-money tokens meet the criteria for significant status. The EBA says it assesses tokens against indicators set out in EU rules, and reviews significant classifications every year. The announcement names USDC as the first of the 45 notified EU e-money tokens to be classified as significant.

That status brings a different supervisory setup for the issuer. Under MiCA, significant e-money tokens are subject to joint supervision by the EBA and the relevant national authority. The EBA also says the ACPR will continue to oversee the areas that remain under its remit.

Does the decision cover USDC issued in the United States?

No. The EBA’s decision concerns USDC issued in the EU by Circle Internet Financial Europe SAS. Circle also issues USDC in the United States through a separate company, Circle Internet Financial, LLC. The EBA said it has signed an information-sharing agreement with the New York State Department of Financial Services to support oversight of cross-border stablecoin activity.

Cointelegraph’s report on the classification also describes the joint oversight role of the EBA and France’s ACPR. The EBA’s announcement sets out the responsibilities each regulator will hold from 12 November.

Sources

• 14 October announcement — eba.europa.eu
• Cointelegraph’s report on the classification — cointelegraph.com