Coinbase to End USDC Rewards in Europe Amid MiCA Regulation

Highlights:

• Coinbase will discontinue USDC rewards for EEA users starting December 1 due to MiCA.
• Qualified users can earn rewards until November 30, with final payouts in December.
• Coinbase’s USDC rewards program will continue for users outside the EEA, unaffected by regulations.

The leading US-based crypto exchange Coinbase announced that it will suspend rewards for dollar-pegged stablecoin USD Coin (USDC) holders in the European Economic Area (EEA) starting December 1. The exchange notified users via email on November 28. Qualified users can earn USDC rewards until November 30. The email also confirms that the final rewards will be distributed within the first 10 business days of December.

MICA is kicking in -> Sunsetting USDC Rewards in the EU Due to MiCA @coinbase @circle pic.twitter.com/8GCGlpt8Xd

— Marina Markezic (@MarinaMarkezic) November 28, 2024

The exchange stated that the discontinuation resulted from stablecoins’ reclassification under the new MiCA regulatory framework. The updated guidelines, categorizing stablecoins as e-money tokens, compelled Coinbase to end its USDC yield program for European users. The USDC rewards program will continue as usual for users outside the EEA. The European Economic Area includes the 27 European Union (EU) member states, along with Iceland, Norway, and Liechtenstein. 

Paul Berg, co-founder, and CEO of Sablier, wrote a sarcastic post on Nov. 28. He said, “Very grateful to the EU for protecting me against earning a yield on my USDC holdings on Coinbase.” 

Very grateful to the EU for protecting me against earning a yield on my USDC holdings on Coinbase pic.twitter.com/Us8ml0PQFY

— Paul Berg (@PaulRBerg) November 28, 2024

USDC Rewards Program

Coinbase’s USDC rewards program allows users to earn daily interest on their USDC holdings. Coinbase offers yearly returns of up to 4.7% annual percentage yield (APY) for USDC holders, varying based on the user’s location. Available in over 100 countries, it offers a simple way for users to grow their assets without engaging in active trading.

Several Crypto Firms Adjust to MiCA Regulations

The introduction of MiCA has prompted several crypto firms in the EEA to modify their offerings for compliance. In October, Coinbase announced plans to remove all non-compliant stablecoins from its platform in MiCA-enforced jurisdictions. This move highlights the exchange’s dedication to regulatory adherence and operational transparency.

JUST IN: ⚡️ According to Bloomberg, Coinbase will delist non-compliant stablecoins under MiCA regulations by the end of the year, which could include $USDT.https://t.co/l0oORrEAV6

— GN Crypto (@GNcrypto_news) October 4, 2024

Similarly, other major crypto exchanges have also made adjustments to comply with MiCA. Bitstamp recently delisted Tether’s euro-pegged stablecoin, EURt. The delisting was due to EURt’s inability to meet the new regulatory requirements. Likewise, Binance made adjustments in June. 

To ensure compliance with evolving rules, it limited services related to unregulated stablecoins. As part of its MiCA compliance efforts, stablecoin issuer Tether has invested in the Dutch fintech Quantoz to help develop MiCA-compliant stablecoins, EURQ and USDQ. This strategic move is designed to ensure Tether’s stablecoins comply with MiCA’s regulatory requirements. It aims to strengthen their market position in a regulated landscape.

Meanwhile, Circle has announced the launch of a MiCA-compliant EURO stablecoin. The issuer introduced EURC, becoming one of the first to launch a euro-pegged stablecoin compliant with the new regulations.

MiCA aims to strengthen consumer protection and promote financial stability. Stablecoin issuers must maintain adequate reserves to ensure redemption at any time. They are also required to meet operational and prudential standards, including strong governance structures and transparent reporting.