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

Coinbase users who fall under the jurisdiction of the European Economic Area (EEA) will no longer be able to earn a yield on their USDC holdings, effective December 1. This is due to a new Markets in Cryptoassets (MiCA) regulation that will come into effect on that date.

The Markets in Cryptoassets Act (MICA) is a new piece of legislation that will be introduced by the European Union to regulate the cryptocurrency markets. The act will classify stablecoins as “e-money tokens,” which will be subject to stricter regulations. This will limit the ability of stablecoin issuers to offer interest on their tokens.

The new regulation will apply to all 27 EU member states, as well as Iceland, Norway and Liechtenstein. Several prominent figures in the crypto industry have already expressed their sarcasm regarding this new legislation.

For example, Paul Berg, the co-founder and CEO of crypto infrastructure provider Sablier, said: “Very grateful to the EU for protecting me against earning a yield on my USDC holdings on Coinbase.”

Trading Strategy co-founder Mikko Ohtamaa also chimed in, saying: “I feel protected.”

Additionally, Ripple Labs technology chief David Schwartz commented: “It’s funny how often regulations prevent companies from doing things that are unarguably pro-consumer.”

Meanwhile, Coinbase has stated that users who are already connected to the feature will still accrue rewards for the next two days, until November 30. Any further initiatives — such as whether Coinbase will attempt to reintroduce this feature without running afoul of regulators — have not been commented on as of yet.

At the same time, other stablecoin issuers are beginning to devise their workarounds. 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.

It’s worth noticing the overwhelming opinion 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.