- On December 1, the new MiCA regulation comes into effect
- It applies to the entire European Economic Area (EEA).
- According to this regulation, citizens will not be able to receive stablecoin yields
- This includes Coinbase and its USDC, also Tether and other stablecoin issuers
Coinbase users who fall under EEA regulation will lose the ability to achieve a USDC yield.
This is because a new MiCA regulation that significantly restricts the ability of stablecoins in the region will take effect on December 1.
More About the USDC Yield Restriction
The European Union’s Markets in Cryptoassets Act (MiCA) adopts new legislation tightening the regulation of stablecoins, and restricting interest from them, equating them to “e-money tokens.”
This applies to all states that are part of the European Economic Area (EEA), which includes 27 EU nations, as well as Iceland, Norway and Liechtenstein.
Many prominent figures in the crypto industry have already expressed themselves sarcastically regarding this new legislation. For example, Paul Berg, the co-founder and CEO of crypto infrastructure provider Sablier:
“Very grateful to the EU for protecting me against earning a yield on my USDC holdings on Coinbase.”
Trading Strategy co-founder Mikko Ohtamaa:
“I feel protected.”
Also, Ripple Labs technology chief David Schwartz:
“It’s funny how often regulations prevent companies from doing things that are unarguably pro-consumer.”
At the same time, Coinbase said that users who are already connected to the feature still accrue rewards for the next two days until November 30. Further initiatives, whether Coinbase is going to renew this feature without violating regulators – have not been commented on yet.
Meanwhile, other stablecoin issuers are starting to think about a solution. Tether, following Coinbase, is canceling support for its euro-pegged token, citing “the evolving regulatory frameworks surrounding stablecoins in the European market,” while Binance, on the other hand, is deciding to enter the European market with its EURØP token.
Conclusion
It’s worth noticing that the overwhelming opinion is that the new legislation severely restricts investors in their tools, and the disappointment that the feature remains available outside the EU seems unfair to many.
However, breaking legislation is never a good thing. Let’s see, maybe investor interest will influence further regulatory decisions, and what decisions key crypto players will make against this backdrop.
Be aware and stay tuned.
