US crypto exchange Coinbase is ending its USDC rewards programme for European economic area residents.
The reason? The bloc’s new crypto regulatory framework called Markets in Crypto-Assets Regulation, or MiCA for short.
“Under MiCA, Coinbase is required to terminate the USDC rewards programme for EEA customers beginning December 1, 2024,” a Coinbase spokesperson told DL News.
Coinbase did not specify which rule prevents the firm from offering USDC rewards to European users.
Emails to Coinbase customers shared on social media state new regulatory requirements for e-money tokens as the cause. Regulation of stablecoin issuers under MiCA took effect on June 30 and requires them to hold e-money authorisation in at least one member state. The rest of the law’s rules will snap into action on December 30.
Double-edged sword
For many crypto firms, the EU’s MiCA rules are proving a double-edged sword. On the one hand they provide firms much-needed regulatory clarity. But on the other, they narrow the scope of services they can legally offer.
Coinbase’s rewards programme, which earns users 4.4% annually on USDC stablecoin deposits, is funded with the firm’s own funds and designed to incentivise customers to use the exchange to store their USDC.
The end of the programme won’t impact EEA users’ ability to trade, send, or receive USDC on Coinbase, the spokesperson said.
Coinbase users in other regulatory jurisdictions, such as the UK and the US, can still receive rewards on USDC deposits.
MiCA problems
Several crypto firms have complained that the MiCA rules and their implementation haven’t always hit the mark.
In July, Circle CEO Jeremy Allaire said the MiCA rules for firms issuing stablecoins introduce “a lot of bank risk.”
In November, a group of crypto and blockchain trade associations warned that the lack of time given to comply with MiCA regulations could cause “serious customer detriment and negative financial consequences across all EU member states.”
It’s not the first time Coinbase has said it will remove services due to MiCA. In October, the exchange said it will delist several unauthorised stablecoins for EEA residents by the end of the year. It’s not yet clear which stablecoins will be impacted.
As for EEA residents taking advantage of the USDC rewards programme, they will get one final payout.
“Users eligible to earn USDC rewards prior to the restriction date will continue accruing rewards for USDC balances until December 1,” the Coinbase spokesperson said.
Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.
