Coinbase has announced that it will discontinue its USDC yield offerings for customers in the European Economic Area (EEA) starting December 1, 2024. This decision comes as a direct response to the introduction of the Markets in Crypto-Assets (MiCA) regulation, which stipulates new rules for stablecoins across Europe.
In an email sent to users on November 28, Coinbase indicated that the current USDC Rewards program would be “sunsetting” due to these upcoming legal requirements. Clients have expressed their discontent on various platforms, sharing their disappointment over the decision. Coinbase has stated that eligible clients can still earn rewards on their USDC balances until the program officially ends on November 30.
The MiCA regulations, which were formulated in June 2023, aim to tighten the controls over stablecoin offerings in Europe. One of the key provisions of this regulatory framework bans the payment of interest on stablecoin deposits, often termed as “e-money tokens.” This has led to a massive shake-up in how crypto firms operate, with several other exchanges following suit. As a result, this ruling significantly impacts the services that firms like Coinbase could offer with respect to stablecoins.
Industry figures have reacted with frustration to the news. Paul Berg, co-founder of the token streaming protocol Sablier, humorously commented on social media, highlighting the irony of these regulations that hinder consumer benefits. Likewise, Ripple Labs’ technology chief David Schwartz pointed out that such regulations often restrict businesses from providing services that are undeniably favorable for consumers.
As new regulations like MiCA come into effect, the crypto landscape in Europe faces a period of adjustment. Institutions are scrambling to comply with these regulations by the deadline of December 30, underscoring the pressures faced by firms operating in the crypto space. This also aligns with previous announcements from Coinbase regarding its plans to delist non-compliant stablecoins, including popular assets like Tether (USDT).
The regulations have also prompted other stablecoin issuers, such as Tether, to reevaluate their offerings within the region. Tether recently announced it would halt support for its Euro-pegged stablecoin, EURT, until a more stable regulatory framework is established. Customers holding EURT will have until November 27, 2025, to redeem their tokens as part of the transition.
In conclusion, the upcoming changes due to MiCA regulations signify a transformative period for crypto firms in Europe, as they must navigate complex laws while trying to sustain their customer relationships and service offerings. The suspension of the USDC Rewards program is just one example of the broader implications these regulations harbor for the future of cryptocurrency in the EU.
