Coinbase will end USD Coin (USDC) rewards for European Economic Area (EEA) holders as of December 1. The decision comes in response to the new Markets in Crypto-Assets (MiCA) regulations, the exchange informed customers in an email on November 28.
Meanwhile, eligible users will continue to earn USDC rewards until November 30. In addition, the email stated that final USDC rewards will be distributed within the first 10 business days of December.
Coinbase’s rewards program allows users to earn daily rewards by holding USDC on the platform. The program covers more than 100 jurisdictions, offering global availability. The annual percentage rate (APY) varies by location, reflecting regional economies, regulations and market conditions.
What’s more, the rewards accumulate automatically and are usually distributed within a certain period. This provides users with a way to multiply their assets with low risk.
In an email, Coinbase explained that MiCA is introducing new compliance rules for e-money tokens such as USDC. Effective June 2023, with key rules taking effect June 30, 2024, MiCA requires issuers to be licensed credit or e-money institutions.
These issuers must undergo an authorization process, including management and shareholder checks, 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 the stability of the tokens. The regulations also ensure that holders can exchange tokens at any time at full face value. Clear guidelines govern the storage, management and reporting of these reserves.
In addition, issuers of e-money tokens are not allowed to offer interest, which distinguishes them from traditional e-money and provides stability without classifying them as financial instruments.
As a result, Coinbase recently announced plans to withdraw stablecoins that do not comply with the MiCA regulation, with implications for the EEA. In addition, Uphold, Bitstamp and Tether have announced their plans to comply with these regulatory changes.
