Coinbase Discontinues USDC Yield Offerings in the EEA, Citing MiCA Regulations

Coinbase has announced that it will discontinue its USDC yield offerings for customers in the European Economic Area (EEA) starting December 1, 2024.

Coinbase has announced the termination of its USDC yield offerings for clients in the European Economic Area (EEA), effective December 1, 2024. This decision follows the implementation of the European Union’s Markets in Crypto-Assets (MiCA) regulations.

An email from Coinbase, dated November 28, has notified affected users about the upcoming conclusion of the USDC Rewards program. Despite inquiries, Coinbase has yet to confirm the cessation of this service.

Coinbase’s decision will impact all eligible users in the EEA, which comprises 30 nations, including all 27 EU member states, Iceland, Norway, and Liechtenstein. Customers can continue earning rewards on their USDC balances until November 30, 2024, before the program officially ends.

According to Coinbase, this change aligns with compliance requirements under MiCA, which introduces stringent standards for stablecoins. These regulations, adopted in June 2023, mandate adherence by December 30, 2024. Notably, MiCA rules prohibit offering yield on stablecoins, classified as “e-money tokens.” Crypto firms operating within the EU must comply to continue offering their services.

Reactions from the crypto community to the regulatory environment have been mixed. Paul Berg, co-founder and CEO of the token streaming protocol Sablier, expressed his dissatisfaction with the EU's approach in a sarcastic post on X, reacting to the email from Coinbase. He stated that he feels “very grateful to the EU” for preventing him from earning yields on his USD Coin holdings.

David Schwartz, Chief Technology Officer at Ripple Labs, also commented on the regulatory landscape, highlighting its tendency to obstruct companies from offering consumer-friendly services. In his view, regulations should prioritize consumer benefit, rather than hindering it.

Coinbase's decision is part of a broader trend within the crypto industry as companies adapt to the MiCA requirements. In October, Coinbase announced plans to delist non-compliant stablecoins from its European exchange by the end of 2024. Among the stablecoins set to be delisted is Tether's EURT, a Euro-pegged token.

On November 27, Tether confirmed that it will discontinue support for EURT until a more secure regulatory framework is established. Users holding EURT balances on blockchains have until November 27, 2025, to redeem their holdings. Meanwhile, Tether has revealed plans to invest in Quantoz Payments, aiming to develop MiCA-compliant stablecoins, EURQ and USDQ.

Very grateful to the EU for protecting me against earning a yield on my USDC holdings on Coinbase pic.twitter.com/Us8ml0PQFY

— Paul R. Berg (@PaulRBerg) November 28, 2024

The MiCA regulations have brought about significant shifts within the European crypto landscape. By setting clear compliance standards, the EU aims to regulate the industry more strictly. However, these rules have also led to concerns about stifling innovation and limiting consumer benefits, as seen in the termination of Coinbase’s USDC Rewards program.

Coinbase’s decision marks a pivotal moment in how crypto firms navigate regulatory challenges in the EU. While the cessation of USDC Rewards may disappoint many users, it highlights the broader impact of MiCA regulations on the industry. Companies now face the dual challenge of complying with stringent rules while striving to maintain user trust and satisfaction.

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