- Coinbase halts the USDC rewards program in Europe, effective December 1, due to MiCA regulations.
- MiCA reclassifies stablecoins like USDC as e-money tokens, impacting yield for EEA users.
- Analysts predict growth for euro-pegged stablecoins, as MiCA regulations foster innovation and competition.
Coinbase users in Europe are frustrated as the exchange ends its USDC rewards program. On November 28, Coinbase, multiple recipients shared on X, announced via email that it will discontinue the yield program on December 1 for stablecoins in affected regions due to new requirements under the EU’s Markets in Crypto-Assets (MiCA) regulation.
The regulatory shift reclassifies stablecoins like USDC as e-money tokens under MiCA. Users will earn a yield on their USDC balances until November 30, with accrued rewards distributed within the first 10 business days of December. Coinbase’s USDC rewards program offers varying annual percentage yields (APYs) across over 100 European jurisdictions.
Coinbase Aligns with MiCA Regulations
Coinbase’s move interpreted broader trends as crypto firms transform to MiCA’s stricter regulation for e-money tokens. This policy shift immediately affects USDC holders in the EEA, where USDC holders will no longer receive daily yields starting November 30. Coinbase strongly advocated compliance with the MiCA provisions for operating in Europe.
Other firms, like Binance and Bitstamp, have followed suit and adjusted their offers. Bitstamp removed Tether’s EURt from its list, and Binance also limited the services for non-compliant stablecoins earlier this year. Stablecoin issuer Tether discontinued support for its euro-based stablecoin, EURt, on Nov. 27.
The company now intends to focus on compliant MiCA products, such as EURQ and USDQ, produced from the cooperation of the Dutch fintech Quantoz. Paolo Ardoino, Tether’s CEO, slammed MiCA for exposing potential banking risks.
The European Economic Area (EEA) accounts for crypto users in its 30 countries, including the EU, Iceland, Norway, and Liechtenstein. Certain users, among them Paul Berg, CEO of Sablier, have come forward to sarcastically criticize the MiCA’s no yield-earning policy, highlighting regulatory challenges on X post on November 28.
Euro-Stablecoins Poised for Growth
MiCA’s adoption promotes investor trust, sparks innovation, and clarifies the law. Analysts believe euro-pegged stablecoins will capitalize on compliance with regulations and growing interest across the financial landscape. The overall market cap of the first five euro-stablecoins is €310 million euros, which is only 0.34 % of the global stablecoin market.
Also, the MiCA regulations raised some interest in euro-pegged stablecoins. According to a recent report, Schuman Financial plans to issue EURØP, a euro-pegged stablecoin, within a few weeks. In the same breath, experts believe euro-stablecoins will attract fierce competition and innovation from its issuers.
Svein Valfells, co-founder and CEO of the first European MiCA-compliant euro stablecoin, Monerium, predicts that euro stablecoins could dominate the market. Cumberland revealed their opinion about the growth of euro-denominated stablecoins in the coming years. Valfells said that Euro-pegged stablecoins will stimulate the on-chain experience for euro users, forecasting more competition and new innovative projects in the stablecoin sector.
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