MiCA forces Coinbase to end the USDC earn program in Europe

Coinbase will stop rewarding USDC holders in the European Economic Area (EEA) starting December 1st due to an upcoming MiCA (Markets in Crypto-Assets) regulation. EEA USDC holders will have until November 30th to earn their final rewards in the program, and their dues will be paid during the first ten business days of December. 

The Coinbase Earn program, which is available to users in over 100 jurisdictions, generates yields based on the users’ USDC holdings in the exchange. The APY (annual percentage yield) varies depending on location. According to an email sent by the Coinbase team to its users on November 28th, MiCA was introducing new regulations for E-money tokens (or stablecoins).

Coinbase adjusts to new MiCA rules and discontinues USDC rewards in Europe

Europe "protecting" its citizens by ensuring they can't earn yield on their stablecoins via @coinbase 🤡 pic.twitter.com/ExTiNOjB3j

— 0xLouisT (@0xLouisT) November 28, 2024

Coinbase will be ‘sunsetting’ the USDC earn program for EEA customers from the 1st of December due to compliance with upcoming MiCA regulations labeling stablecoins as E-money tokens. The new MiCA regulations introduce stricter rules for stablecoins, forcing exchanges to delist or remove non-compliant tokens. Coinbase confirmed that EEA users had until the 30th of November in the USDC earn program, and their final payments would be distributed within the first ten days of December. 

MiCA’s establishment of a single regulatory environment for digital assets in the Eurozone comes with huge changes in the crypto market. Coinbase’s announcement in October revealed that it would remove all non-compliant stablecoins in MiCA-regulated regions in line with the agency’s requirements. Paul Berg, the co-founder and CEO of Sablier, sarcastically thanked the EU for ‘protecting’ him against earning a yield on his USDC holdings in Coinbase. “I’m very grateful,” he taunted.

The MiCA framework sought to increase stability and transparency in the European crypto market, and exchanges like Coinbase were already taking action to comply with the upcoming regulations.

MiCA rules force crypto exchanges to adapt or exit the EEA

According to Tether CEO Paolo Ardoino, MiCA regulations for stablecoins have forced exchanges operating in the EEA to adapt to the fast-changing environment or exit. Ardoino recently said Tether would turn its focus to other initiatives until the EU introduced a more ‘risk-averse’ regulatory framework. He pointed out that MiCA represented ‘potential banking systemic risks.’ Tether said it was refocusing its resources on the development of MiCA-compliant tokens like the USDQ and EURQ. Tether invested in the Dutch fintech Quantoz on November 18th to boost the development of both tokens. 

Bitstamp also delisted Tether’s Euro-pegged stablecoin EURt for non-compliance with MiCA requirements. The exchange further confirmed it would not list any tokens that failed to meet MiCA’s E-money tokens (EMT) regulatory requirements. Notably, Bitstamp did not delist EMTs that were not Euro-pegged and not within MiCA regulations. It just limited their availability to European customers. 

Binance implemented a phased approach to ensure that its stablecoin offerings aligned with MiCA regulations in Europe. According to Binance, the transitional measures aimed at allowing its EEA customers to switch to regulated stablecoins without any market disruptions. Binance announced that it would implement restrictions across its entire product range to prevent users from accessing products and services involving stablecoins that are not compliant with MiCA rules.

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