Over 50,000 Europeans urge EU to ease stablecoin rewards restrictions in MiCA review
During the European Commission’s review consultation of the Markets in Crypto-Assets (MiCA) framework, more than 50,000 Europeans petitioned to relax the restrictions on stablecoin rewards. The campaign, led by crypto advocacy group Stand With Crypto EU, calls for regulated stablecoin issuers to be allowed to provide incentives such as cashback, loyalty benefits, and fee reductions, which are currently prohibited under MiCA.
Widespread Campaign for Regulatory Change
According to Stand With Crypto EU, over 50,000 individuals sent letters to the European Commission urging to permit regulated stablecoin issuers to offer rewards to users. Additionally, more than 126,000 people signed the group’s petition advocating for a more permissive EU stance on stablecoins.
Currently, the MiCA regulation prohibits issuers and crypto service providers from paying interest on stablecoins. Advocates argue this puts these products at a disadvantage compared to bank deposits and other e-money instruments that can offer customers various benefits.
Call to Compete with the US
Harry Pearce Gould, general manager of Stand With Crypto EU, told Cointelegraph that the MiCA review represents an opportunity to allow regulated stablecoins to provide rewards, which could increase their appeal and competitiveness versus dollar-denominated stablecoins.
He emphasized that strong euro-backed stablecoins matter for the euro’s global stature and the EU’s payment sovereignty, as well as wider market adoption.
European Central Banks’ Positions
Simultaneously, the European System of Central Banks (ESCB) submitted recommendations in September 2023 to amend MiCA’s rules regarding stablecoins.
The ESCB suggests extending the existing prohibition on paying interest on stablecoins to encompass yield generated through lending, borrowing, and staking arrangements. Furthermore, it proposes replacing the MiCA requirement for issuers to hold minimum reserves as bank deposits with liquidity thresholds, aiming to reduce risks to banks during potential stablecoin runs.
The European Central Bank (ECB) notes liquidity mismatch risks: stablecoins settle 24/7, while their reserve assets may settle under traditional timelines.
The ECB also expresses concerns that mass outflows from bank deposits to stablecoins could weaken bank lending and the efficacy of monetary policy. ECB President Christine Lagarde advocates focusing instead on tokenized financial infrastructure anchored by central bank money.
Why it matters
This news highlights the growing tension between crypto advocates pushing for the development of stablecoins in the EU and regulators concerned with financial stability. Over 50,000 Europeans call for allowing rewards to stablecoin holders, which could foster greater competition and adoption of the euro in its digital form. However, central banks emphasize liquidity risks and potential impacts on the banking sector and monetary policy. The outcomes of the MiCA review may shape EU crypto regulation for years to come and influence the bloc’s positioning in the global digital economy.
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