Coinbase to End USDC Rewards for EU Clients Due to MiCA Regulations

Coinbase has announced that it will be discontinuing its USDC Rewards program for customers in the European Economic Area (EEA) due to the introduction of the European Union's MiCA (Markets in Crypto-Assets) regulations. The program will officially end on December 1, 2024, a move that has caused frustration among affected users.

In an email sent to customers and shared on X (formerly Twitter), Coinbase confirmed that the USDC Rewards program would be "sunsetting" as part of the compliance with MiCA, which introduces stringent regulations for stablecoins. The EEA, which comprises 30 countries, including all 27 EU member states as well as Iceland, Norway, and Liechtenstein, will be impacted by this decision.

Coinbase has assured users that they can continue earning USDC rewards until November 30, 2024, with the rewards program concluding at midnight on December 1. The exchange cited the new regulations under MiCA as the driving force behind the decision, specifically the ban on offering interest or yield on stablecoins, which includes USDC.

The Impact of MiCA’s Stablecoin Regulations

MiCA, which was introduced in June 2023, requires crypto firms and stablecoin issuers to comply with strict guidelines if they want to operate within the EU. One of the major stipulations under these laws is the prohibition of offering yields on stablecoin holdings, commonly referred to as “e-money tokens.” The regulations aim to bring greater oversight to the crypto space and ensure that companies operate within established frameworks. The deadline for full compliance with MiCA is December 30, 2024.

The news has sparked a reaction from industry figures. Paul Berg, co-founder and CEO of token streaming protocol Sablier, sarcastically expressed gratitude for the EU’s protective stance against earning yield on USDC, while Ripple Labs' technology chief, David Schwartz, commented on the irony that regulations often hinder consumer-benefiting services.

Coinbase’s Compliance and Other Changes in the EU

This decision is part of Coinbase’s broader effort to align with MiCA regulations. Earlier in October, the exchange announced plans to delist non-compliant stablecoins from its European platform by the end of 2024. One of the stablecoins set to be delisted is Tether (USDT), which has faced similar regulatory scrutiny.

In a related move, Tether confirmed on November 27 that it would cease support for its Euro-pegged stablecoin, EURT, citing the need for a more risk-averse regulatory framework in the EU. Customers with EURT balances will have until November 27, 2025, to redeem their holdings. However, Tether also announced plans to invest in Quantoz Payments to support MiCA-compliant stablecoins, EURQ and USDQ.

As the crypto industry grapples with the evolving regulatory landscape in Europe, Coinbase's decision highlights the growing impact of MiCA on crypto services across the region.