Stablecoin Compliance: MiCA, US Regulation, and Reserve Requirements

Why Stablecoins Dominate the Regulatory Agenda

Stablecoins—digital assets designed to maintain a stable value relative to a reference asset, typically a fiat currency—have become the critical payment and settlement infrastructure of the tokenized asset economy. Over $160 billion in stablecoin market capitalization circulates globally as of early 2026, enabling the settlement of tokenized securities, real estate transactions, DeFi protocols, and cross-border payments at a scale that has drawn sustained regulatory attention from every major financial authority on the planet.

The regulatory urgency is driven by systemic risk concerns, not just investor protection. A stablecoin of sufficient scale—the Terra/LUNA collapse in May 2022, which wiped out approximately $50 billion in value in 72 hours, provided the cautionary example—can destabilize broader financial markets. The IMF, FSB, and BIS have all published reports warning of the potential for large stablecoins to create bank-run dynamics if reserve assets are insufficient or poorly managed. These systemic concerns explain why stablecoin regulation has moved faster than almost any other digital asset category.

MiCA: The Definitive EU Framework

MiCA (Regulation (EU) 2023/1114), fully in force since December 30, 2024, is the most comprehensive stablecoin regulatory framework currently in effect anywhere in the world. It creates two distinct categories for stablecoins:

Asset-Referenced Tokens (ARTs)

ARTs are crypto-assets that purport to maintain a stable value by referencing multiple currencies, commodities, other crypto-assets, or a basket of such assets. The Terra/LUNA-style algorithmic stablecoin and any multi-currency basket stablecoin fall into this category.

Issuers of ARTs must:

1. Authorization: Obtain authorization from the competent national authority (NCA) of their home EU member state, unless they are a credit institution that issues ARTs as an ancillary activity. The application must include a business plan, a legal opinion on the ART’s classification, governance arrangements, a recovery plan, and detailed documentation of the reserve management framework.

2. Capital requirements: Maintain own funds of at least €350,000 or 2% of the average amount of reserve assets, whichever is higher.

3. Reserve assets: Maintain a reserve of assets in an amount at least equal to claims from ART holders at all times. Reserve assets must be legally segregated, invested only in HQLA (high-quality liquid assets), and held with regulated custodians. ESMA and EBA have published detailed RTS (regulatory technical standards) specifying eligible reserve asset types.

4. Redemption rights: ART holders must have a direct claim on the issuer for redemption at par value at all times, exercisable in euro or the reference currency.

5. Significant ART additional requirements: ARTs deemed “significant” by EBA (based on volume, number of holders, cross-border activity, interconnectedness) are subject to additional supervision, including mandatory liquidity stress testing, interoperability requirements, and the possibility of direct EBA intervention.

6. Non-EU currency cap: The most commercially significant MiCA provision for global stablecoin issuers: Article 23 imposes a €200 million per day cap on transactions in ARTs denominated in non-EU currencies (e.g., USD-pegged ARTs) within the EU. ARTs exceeding this cap must be suspended for further issuance until a remediation plan is approved. This provision directly targets USDT and USDC-like USD stablecoins used for EU commerce.

E-Money Tokens (EMTs)

EMTs are crypto-assets that purport to maintain a stable value by referencing a single fiat currency. USDC (USD-pegged), EURC (EUR-pegged), and similar single-currency stablecoins are EMTs under MiCA.

Issuers of EMTs must be authorized as either a credit institution (bank) or an e-money institution (EMI) under Directive 2009/110/EC (the E-Money Directive). This requirement is transformative: it means that non-bank stablecoin issuers must obtain an EMI license in an EU member state—the equivalent of becoming a regulated payment institution—to issue EMTs legally in the EU.

Circle (issuer of USDC) received EMI authorization from the Autorité de Contrôle Prudentiel et de Résolution (ACPR) in France in 2024, making USDC compliant as an EMT for EU use. Tether (issuer of USDT) had not obtained EU EMI authorization as of February 2026, meaning USDT technically cannot be issued or offered by Tether to EU customers as a compliant EMT, though the question of what constitutes “offering” in a permissionless blockchain context remains legally contested.

EMT reserve requirements under MiCA are the strictest of any category:

• 100% reserve backing in fiat currency or HQLA
• Held at a licensed credit institution or central bank
• Legally segregated from the issuer’s own assets
• Audited at least annually by an independent auditor registered with ESMA

The €200 million daily transaction cap also applies to non-EUR EMTs within the EU.

MiCA CASP Requirements for Stablecoin Trading Platforms

Platforms that offer trading, exchange, or custody services for ARTs or EMTs—but are not themselves the issuers—must obtain a CASP (Crypto-Asset Service Provider) license under MiCA. The CASP license requirements are covered in detail in the MiCA regulations guide and Licensing section. The CASP license provides EU-wide passporting rights across all 27 member states, a significant commercial advantage.

Singapore: MAS Single-Currency Stablecoin Framework

The Monetary Authority of Singapore published its stablecoin regulatory framework in August 2023, covering single-currency stablecoins (SCS) pegged to the Singapore Dollar or any G10 currency. The framework applies to stablecoins issued in Singapore with a circulation exceeding S$5 million.

Key Requirements

Reserve backing: 100% backing by cash and cash equivalents (bank deposits, short-dated government securities of the peg currency’s jurisdiction). The reserve calculation must use end-of-day values, with daily reporting to MAS.

Capital: Issuers must hold the higher of S$1 million or 50% of annual operating expenses as additional capital on top of reserve assets.

Licensing: SCS issuers must hold a Major Payment Institution (MPI) license under the Payment Services Act (PSA). The MPI license requires minimum base capital of S$250,000 (with practical total costs of S$500,000+ including compliance infrastructure), and the application process typically takes 12–18 months.

Audit: Annual audits by MAS-approved auditors, with monthly reserve attestations published on the issuer’s website.

Redemption: Issuers must redeem SCS within 5 business days of a redemption request at par value.

MAS-regulated stablecoin designation: MAS will designate SCS meeting these requirements as “MAS-regulated stablecoins,” enabling their use in Singapore’s payments infrastructure and DeFi ecosystem without the regulatory uncertainty facing non-designated stablecoins.

StraitsX (backed by Xfers, a Singapore-based payments company) received the first MAS SCS framework approval for its XSGD (SGD-pegged) and XUSD (USD-pegged) stablecoins. Circle’s USDC is being evaluated under the framework.

United States: Legislative Landscape

The US stablecoin regulatory landscape remains in legislative flux, with no federal stablecoin law in effect as of February 2026. Two major bills have advanced:

STABLE Act (Stablecoin Transparency and Accountability for Better Ledger Economy Act)

Introduced in the House Financial Services Committee in 2025, the STABLE Act would:

• Require all stablecoin issuers to be federally or state-chartered depository institutions or licensed non-bank payment stablecoin issuers
• Mandate 1:1 backing by cash, insured deposits, short-dated Treasury bills, or central bank reserves
• Prohibit algorithmic stablecoins for two years pending study
• Give the OCC (Office of the Comptroller of the Currency) supervisory authority over federally chartered stablecoin issuers
• Require monthly reserve disclosures audited by a registered public accounting firm

GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins)

Introduced in the Senate Banking Committee in early 2025, the GENIUS Act takes a more permissive approach:

• Creates a federal framework for “payment stablecoins” with 1:1 reserve requirements
• Allows both bank and non-bank issuers under different federal chartering pathways
• Preserves a role for state money transmitter licenses for smaller issuers
• Includes explicit provisions for foreign stablecoin issuers accessing US markets (subject to reciprocal regulatory treatment agreements)

Both bills include anti-money laundering provisions incorporating FATF Travel Rule requirements, sanctions screening obligations, and mandatory suspicious activity reporting to FinCEN.

In the absence of enacted federal legislation, US stablecoin issuers operate under a patchwork of state money transmitter licenses (Circle holds MTLs in 49 states plus DC for USDC operations), the New York Department of Financial Services’ BitLicense and trust charter framework, and the OCC’s 2021 guidance permitting national banks to hold stablecoin reserves and participate in blockchain-based settlement.

USDC and USDT: Compliance Approaches Compared

Circle (USDC): The most regulatory-compliant major stablecoin globally. Circle holds state money transmitter licenses across the US, an EU EMI license (France/ACPR), and MAS MPI registration in Singapore. USDC reserves are 100% in cash and short-dated US Treasury instruments, held at regulated US custodians (BNY Mellon, BlackRock’s BUIDL fund). Monthly reserve attestations are published by Grant Thornton. Circle has proactively engaged with every major regulator globally.

Tether (USDT): The largest stablecoin by market capitalization (~$139 billion as of early 2026). Tether is incorporated in the British Virgin Islands and has historically maintained less regulatory engagement than Circle. USDT’s reserve disclosures have improved significantly since 2021 (now covering ~85% in cash and cash equivalents, ~15% in other assets), following a settlement with the CFTC and NY Attorney General. USDT is not an MiCA-compliant EMT in the EU and is not covered by the MAS SCS framework. Its legal status in the EU for commercial use by platforms regulated under MiCA remains unresolved.

Reserve Requirements: Global Comparison

The standard of “100% reserve backing” masks significant variation in what qualifies as an eligible reserve asset across jurisdictions:

• MiCA (EU): HQLA per EBA RTS—cash, central bank deposits, EU government bonds, UCITS money market funds (subject to daily liquidity requirements)
• MAS (Singapore): Cash, bank deposits, G10 government bonds with residual maturity under 6 months
• STABLE Act (proposed, US): Cash, FDIC-insured deposits, Treasury bills with residual maturity under 93 days, Fed repo agreements
• NYDFS (current, US): Dollar-denominated assets, US Treasuries, agency securities, reverse repo backed by US government securities

The practical compliance implication: a stablecoin issuer seeking global compliance must design a reserve portfolio that simultaneously satisfies all applicable jurisdiction’s standards, which in practice means the most conservative common denominator—short-dated US Treasury bills and central bank deposits.

For CASP licensing requirements related to stablecoin trading platforms, see the Licensing and MiCA regulations sections. For jurisdiction comparison on stablecoin regulation, see the US vs EU benchmark.

Authority references: MiCA Full Text (EUR-Lex) · MAS Digital Payment Tokens · FATF Stablecoin Guidance · FSB Global Stablecoin Reports