Coinbase Ends USDC Rewards for Europe-Based Customers in Response to MiCA

Coinbase will end USD Coin (USDC) rewards for holders in the European Economic Area (EEA) starting Dec. 1. The decision is a response to the new Markets in Crypto-Assets (MiCA) regulation, the exchange told customers via email on Nov. 28.

Meanwhile, qualified users will continue earning USDC rewards until Nov. 30. Furthermore, the email states the final USDC rewards will be distributed within the first 10 business days of December.

Coinbase’s rewards program allowed users to earn daily yields via holding USDC on the platform. The program spans over 100 jurisdictions, offering global accessibility. The annual percentage yield (APY) varies by location, reflecting regional economics, regulations and market conditions.

Further, rewards accumulate automatically and are typically distributed within a set period. This provides users with a low-risk way to grow their assets.

MiCA Demands Licensed Issuers and Backed Reserves for Tokens Like USDC

In the email, Coinbase explained that MiCA introduces new compliance rules for e-money tokens like USDC. Effective since June 2023, with key provisions starting June 30, 2024, MiCA requires issuers to be licensed credit or electronic money institutions.

These issuers must complete an authorization process, including checks on management and shareholders and adhere to strict prudential standards.

More specifically, e-money tokens must be backed by reserves equal to their total circulating value. These reserves must be secure, easily accessible and well-managed to maintain token stability. Regulations also ensure holders can redeem tokens anytime at full nominal value. Clear guidelines govern the custody, management, and reporting of these reserves.

Coinbase and Others Align with MiCA Standards

Further, e-money token issuers cannot offer interest, setting them apart from traditional electronic money and ensuring stability without being classified as financial instruments.

Relatedly, Coinbase recently announced plans to delist stablecoins that do not comply with the the MiCA regulation, impacting the EEA. Additionally, Uphold, Bitstamp and Tether have announced their plans to comply with these regulatory changes.