- Coinbase is withdrawing its USDC rewards program for EEA customers.
- Exchange blames new EU crypto rules.
- MiCA goes into action on December 30.
American crypto exchange Coinbase is ending its USDC rewards program for residents of the European Economic Area.
The reason? The bloc’s new crypto regulatory framework is called Markets in Crypto-Assets Regulatory, or MiCA for short.
“As part of MiCA, Coinbase is required to discontinue the USDC rewards program for EEA customers beginning December 1, 2024,” a Coinbase spokesperson said. DL News.
Coinbase has not clarified what rule prevents the company from offering USDC rewards to European users.
Emails to Coinbase customers shared on social media point to new regulatory requirements for e-money tokens as the cause. Regulation of stablecoin issuers under MiCA came into force on June 30 and requires them to hold an e-money authorization in at least one member state. The rest of the law’s rules will come into effect on December 30.
Double-edged sword
For many crypto companies, the EU’s MiCA rules are proving a double-edged sword. On the one hand, they provide businesses with much-needed regulatory clarity. But on the other hand, they reduce the scope of services they can legally offer.
Coinbase’s rewards program, which earns users 4.4% annually on USDC stablecoin deposits, is funded by the company’s own funds and designed to incentivize customers to use the exchange to store their USDC.
The end of the program will not impact the ability of EEA users to trade, send or receive USDC on Coinbase, the spokesperson said.
Join the community to receive our latest stories and updates
Coinbase users in other regulatory jurisdictions, such as the UK and US, can still receive rewards on USDC deposits.
MiCA issues
Several crypto companies have complained that the MiCA rules and their implementation have not always hit the mark.
In July, Circle CEO Jeremy Allaire said MiCA rules for companies issuing stablecoins introduced “a lot of banking risk.”
In November, a group of crypto and blockchain trade associations warned that the lack of time given to comply with MiCA regulations could result in “severe harm to customers and negative financial consequences in all member states of the MiCA EU”.
This is not the first time that Coinbase has announced that it will remove services because of MiCA. In October, the exchange announced that it would remove several unauthorized stablecoins for EEA residents by the end of the year. It is not yet clear which stablecoins will be affected.
As for EEA residents benefiting from the USDC rewards program, they will receive a final payment.
“Users eligible to earn USDC rewards before the blackout date will continue to earn rewards for USDC balances until December 1,” the Coinbase spokesperson said.
Tim Craig is DL News’ DeFi correspondent based in Edinburgh. Contact us with advice at tim@dlnews.com.
