Among the big U.S.-based crypto exchanges, Coinbase is joining Binance in ending the USDC Rewards for customers in the European Economic Area (EEA) by 1 December next year. The regulations come just after the European Union adopted new Markets in Crypto-Assets (MiCA) regulations requiring new rules to be followed in issuing stablecoins.
However, as the company tweeted in its November 28 emails to Coinbase customers, the USDC Rewards program was being ‘sunsetting.’ Affected users have taken to X to vent their frustration at the big disappointment.
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
Funds will be withdrawn by the end of December, ending the program, which lets customers earn yields on their USDC balance. According to Coinbase, eligible users are still able to accrue rewards in the US on their USDC balances until November 30.
Coinbase Faces Backlash Over USDC Rewards Shutdown Amid MiCA Compliance Push
The swift decision was reportedly driven by Stiff MiCA provisions that do not allow offering stablecoin e-money tokens interest or yield. Passed in June 2023, they will go into effect by December 2024, and crypto firms must comply with them by the end of the year.
Paul Berg, co-founder and CEO of token-streaming protocol Sablier, criticized the move, expressing sarcasm in his post on X: “It is very nice of the EU to protect me from collecting yield in USDC.” This sentiment mirrored that of Ripple Lab’s CTO David Schwartz, who called it a situation where regulation happens that cuts off businesses that are serving the consumer.
Schwartz chimed in, noting: ‘It’s kind of funny, regulations always seem to get in the way of a company from accomplishing what’s done for the benefit of the consumer,’
The MiCA regulations require, for example, stablecoin issuers and crypto firms to meet strict operational standards such as transparency, reserve backing, and restrictions concerning interest-based offerings. Coinbase had already said it would remove other non-compliant stablecoins, like Tether’s Euro-pegged stablecoin EURT, from its European exchange in October.
On Nov. 27, Tether announced it would stop supporting EURT, Facebook’s currency, due to an ‘insufficient regulatory environment.’ However, Tether pledged that it would invest in EuRoadQ and USDRoadQ stablecoins, which are based on MiCA-compliant blockchain payment provider Quantoz Payments.
Coinbase’s end of the USDC Rewards program is another recent change that underscores the extent to which MiCA opposes crypto firms in Europe. However, some say the regulations offer badly needed clarity, while others complain that they will hamper innovation and reduce customer benefits.
Crypto companies are already on the verge of a regulatory wave, and by the time MiCA has been fully implemented, they’ll be caught up in the tsunami. If they don’t adapt, they could easily be left behind in what will undoubtedly be one of the most important economic regions in the world. However, the question is whether this is the beginning of a pathway to more lasting growth or the end of an era for the industry.
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