Starting December 1, a popular cryptocurrency exchange will cease offering rewards on USDC tokens for users in the European Economic Area (EEA). This action follows the introduction of new regulations under the Markets in Crypto-Assets (MiCA) framework, which addresses compliance requirements for cryptocurrency and stablecoin issuers.
Users eligible for rewards will continue to accumulate them until November 30, with the final payments being processed within the first 10 business days of December. The rewards program provided users with daily returns for holding USDC, and it was active in over 100 regions, offering varying annual percentage yields based on local conditions.
The MiCA regulation, which is set to fully take effect in June 2023, imposes enhanced compliance obligations on e-money tokens, such as USDC. By June 30, 2024, issuers will need to obtain licenses as credit or electronic money institutions and adhere to strict standards. These include maintaining adequate reserve management and liquidity levels. Notably, issuers will be prohibited from offering interest on these tokens to ensure their stability and to prevent classification as financial instruments.
In response to the regulatory landscape, the exchange is preparing to delist certain non-compliant stablecoins from its platform in the EEA by the end of the year. The regulatory changes necessitate heightened transparency, liquidity, and consumer protection measures for stablecoin issuers. Affected customers will have the opportunity to transition to stablecoins issued by approved organizations, including USDC and EURC, which are linked to the US dollar and euro, respectively. The adoption of stablecoins has surged, with numerous companies, such as PayPal, incorporating them into their operations.
This shift highlights the evolving regulatory environment around cryptocurrencies and the need for transparency and consumer safeguards as the market grows.