Coinbase is ending its USDC rewards program for users in the European Economic Area (EEA) to comply with the Cryptoasset Markets Regulation (MiCA), which came into force on June 30th.
The exchange said the MiCA regulation will affect e-money tokens. With more regulations, more oversight will follow.
The change was first shared by X (former Twitter) user Marina Markezic on November 28. In an email sent to users who may be affected by the change, Coinbase stated that users will still be able to earn rewards until November 30th before officially suspending the program on December 1st.
More EU regulations
Coinbase will distribute the final USDC Rewards payment to affected users within the first 10 business days of December.
Launched on November 20, the USDC Rewards program allows users to earn an annual percentage yield of around 4.7% up to holding USDC in your Coinbase wallet. Rewards are paid monthly, directly into users’ wallets, and there is no need for lock-in periods.
Through the program, Coinbase aims to promote the use of stablecoins while providing users with a way to earn passive income from their digital assets. The program is available to users in many regions around the world, although specific eligibility may depend on local regulations and requirements.
In early October, the exchange said it would delist certain stablecoins that did not meet new compliance standards by the end of the year. This raises concerns about the possible removal of USDT from Tether by Coinbase, the leading stablecoin by market cap, although the exchange has not yet officially confirmed this.
The MiCA regulation introduces strict standards for stablecoin issuers, focusing on transparency, liquidity and consumer protection. These requirements aim to improve the stability and reliability of stablecoins in the EU market
The rules are expected to come into force on December 30, 2024. To prepare for their full implementation, several major cryptocurrency exchanges have ended support for non-compliant stablecoins.
OKX has taken steps to limit the availability of unsupported stablecoins, while Bitstamp and Uphold have placed restrictions on these tokens, including USDT.
Other platforms are also reevaluating their stablecoin offerings as part of their efforts to comply with MiCA regulations.
Tether will shift focus to MiCA-compatible stablecoins
As the largest stablecoin with $133 billion in market cap, the exit of a major exchange like Coinbase could impact USDT liquidity and trading volumes in the EEA.
The potential removal also gives an advantage to competitors like Circle’s USDC, one of the few stablecoins that is fully compatible with MiCA in the European Union. The second-largest stablecoin could take advantage of this opportunity to gain market share, especially in the European Union.
In response to delisting speculation, Tether on Wednesday announced the discontinuation of support for its euro-pegged stablecoin, EURT. The company said the decision was made due to regulatory changes associated with the MiCA regulation.
Minting of new EURT has been suspended since 2022, according to Tether. As part of the shutdown, holders are encouraged to redeem their tokens by November 27, 2025.
The company said it is now focused on developing stablecoins that comply with MiCA regulations. Tether and Quantoz Payments are working on EURQ and USDQ, their reportedly MiCA-compatible stablecoins backed by Tether’s Hadron technology.
Tether has faced scrutiny regarding its reservation practices and transparency. MiCA regulations will likely require Tether to improve its disclosures and undergo audits, which could affect its operational flexibility in Europe.
Tether CEO Paolo Ardoino previously explained that MiCA’s stringent cash reserve requirements could pose systemic risks for both banks and digital assets. While Ardoino praised EU lawmakers’ efforts to establish a clear legal framework for digital assets, he was also concerned about their side effect on Tether’s business model.
