Coinbase to Halt USDC Rewards in EU Due to MiCA Regulations

On December 1, 2024, Coinbase will cease its rewards program for USDC holders in the EU, as announced in a client letter dated November 28.

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

Under this program, Coinbase clients earn interest on USDC deposits in their accounts, with yields varying by jurisdiction.  

The decision to suspend the program is linked to the MiCA legislation. EU users will continue to receive rewards until November 30, with payments processed within the first 10 business days of December.

In October, Coinbase warned it would restrict access to certain assets for users in the EEA as new requirements come into force.

Circle, a co-issuer of USDC alongside Coinbase, has already secured an Electronic Money Institution (EMI) license from the French regulator ACPR, allowing it to issue EURC and USDC in the European Union.

On November 27, the issuer of the leading stablecoin USDT, Tether, announced it would discontinue support for its euro-pegged token EURT, citing low demand and stricter regulations.

According to the company’s CEO, Paolo Ardoino, European regulatory requirements pose a “systemic risk” to stablecoins and the entire banking system. He noted that the requirement to hold 60% of reserves in uninsured accounts in the EU is “not a very good idea,” potentially leading to the bankruptcy of many financial institutions. 

Tether is among the investors in the fintech project Quantoz, which has launched EURQ and USDQ tokens—MiCA-compliant stablecoins on the Ethereum blockchain.

Exchanges such as Binance, Kraken, and OKX have also warned of service discontinuations for stablecoins in the EU due to MiCA requirements.