Coinbase is scaling back its USDC Rewards initiative for clients in the European Economic Area (EEA) in response to the new Markets in Crypto Assets framework, which commenced on June 30.
The platform mentioned that MiCA will impact electronic money tokens and hinted at more regulatory oversight in the future.
Marina Markezic, an active user on X (once known as Twitter), first disclosed the news on November 28. In a communiqué to users who might be impacted, Coinbase announced that rewards could still be earned until November 30, with the program being officially paused on December 1.
More EU Regulations
In the first ten business days of December, Coinbase plans to process the ultimate USDC Rewards disbursement for affected clientele.
The USDC Rewards program, introduced on November 20, enables users to achieve an annual yield of approximately 4.7% holding USDC using their Coinbase Wallets. Rewards are allocated monthly directly to users’ wallets without the need for asset lock-in.
This initiative by Coinbase aims to boost the adoption of stablecoins, offering users a chance to earn passive income on their digital investments. It is accessible to users globally, subject to regional regulations and specifications.
Earlier in the month of October, the exchange highlighted plans to remove certain stablecoins not aligning with new compliance norms by the year's end. This raises questions about the prospect of Coinbase delisting USDT, Tether's leading stablecoin, though official confirmation is still pending.
MiCA introduces tough criteria for stablecoin producers, highlighting transparency, liquidity, and consumer safeguarding. These measures intend to bolster stablecoin dependability within the EU's market.
Complete rule enforcement is expected by December 30, 2024. Preparing for this, several key cryptocurrency exchanges have opted to suspend support for stablecoins failing to comply.
OKX has restricted access to non-compliant stablecoins, while exchanges like Bitstamp and Uphold have put constraints on these tokens, including USDT.
Other platforms are re-evaluating their stablecoin services to satisfy the MiCA mandates.
Tether is pivoting towards stablecoins meeting the MiCA standards.
Being the largest stablecoin with a hefty $133 billion market cap, delisting from a prominent platform like Coinbase could potentially affect USDT's market dynamics in the EEA.
This shift also presents an opportunity for competitors like Circle’s USDC, which fully complies with MiCA in Europe. As the second-largest stablecoin, it could seize a greater market presence, especially within the European market.
Reacting to removal rumors, Tether revealed on Wednesday the cessation of support for its euro-linked stablecoin, EURT. This decision stems from evolving regulatory perspectives linked to MiCA.
Since 2022, Tether has halted minting of new EURT. Following this decision, token holders are encouraged to reclaim their coins by November 27, 2025.
The focus is now on developing MiCA-friendly stablecoins. Tether, in collaboration with Quantoz Payments, is working on EURQ and USDQ, advertised as MiCA-adherent stablecoins, leveraging Tether's Hadron expertise.
Tether has faced inquiry over its reserve policies and pledges of transparency. MiCA’s demands are anticipated to necessitate more detailed disclosures from Tether, possibly constraining its strategic freedom in Europe.
Previously, Tether’s CEO, Paolo Ardoino, remarked on MiCA’s rigorous cash reserve criteria, warning they could present risks to both banking and digital finance sectors. While appreciating the EU's legislative framework for digital assets, Ardoino voiced worries about its potential impacts on Tether's strategy.
