Starting December 1, Coinbase will discontinue its USD Coin (USDC) rewards program for users in the European Economic Area (EEA). This change comes in response to the new Markets in Crypto-Assets (MiCA) regulation, which the exchange communicated via email to customers on November 28.
Rewards Program Ending on Nov. 30
Qualified users in the EEA can continue earning USDC rewards until November 30. Coinbase stated that the final rewards will be distributed within the first 10 business days of December.
Overview of Coinbase’s USDC Rewards Program
Coinbase’s USDC rewards program allowed users to earn daily yields by holding USDC on the platform. This program was available in over 100 jurisdictions, making it accessible globally. The annual percentage yield (APY) varied depending on the user’s location, reflecting local regulations, economics, and market conditions.
MiCA Regulation Changes Affecting USDC
MiCA, which became effective in June 2023, introduces new compliance rules for e-money tokens like USDC. Starting June 30, 2024, issuers of e-money tokens must be licensed credit or electronic money institutions. These institutions must undergo an authorization process that includes checks on their management and shareholders and must adhere to strict prudential standards.
Additionally, MiCA mandates that the reserves backing e-money tokens must be equal to their total circulating value. These reserves must be secure, accessible, and well-managed to maintain the stability of the tokens. Regulations also ensure that holders can redeem their tokens at any time for their full nominal value.
No Interest on E-Money Tokens
Under MiCA, issuers of e-money tokens like USDC cannot offer interest, which distinguishes them from traditional electronic money. This regulation aims to ensure the stability of e-money tokens while preventing their classification as financial instruments.
Other Companies Following MiCA Compliance
Coinbase is not the only company adjusting to MiCA regulations. The exchange recently announced plans to delist stablecoins that do not comply with MiCA in the EEA. Other platforms, such as Uphold, Bitstamp, and Tether, have also stated their intention to align with these regulatory changes.
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