European Crypto Advocates Challenge MiCA Stablecoin Rules

More than 50,000 Europeans have urged the European Commission to loosen restrictions on stablecoin rewards as part of its review of the bloc’s Markets in Crypto-Assets (MiCA) framework, according to crypto advocacy group Stand With Crypto EU.

The campaign came as the Commission closed its MiCA review consultation on Wednesday, with Stand With Crypto EU pushing for regulated stablecoin providers to be allowed to offer incentives including cashback, loyalty benefits and fee reductions.

The group said more than 50,000 supporters wrote to the Commission during the consultation, while more than 126,000 people have separately signed its petition calling for a more permissive EU approach to stablecoins.

Stand With Crypto EU campaign vehicle outside the European Parliament in Brussels, Belgium. Source: Stand With Crypto EU

MiCA prohibits issuers and crypto service providers from paying interest on stablecoins, a restriction Stand With Crypto argues puts the products at a disadvantage to bank deposits and other e-money products that can offer benefits to customers.

Stand With Crypto said the campaign generated more than six times the 8,221 responses submitted to the European Central Bank’s (ECB) digital euro consultation and far exceeded the 198 responses received during the Commission’s 2020 consultation on crypto rules.

Stand With Crypto calls for EU to compete with US

“We are calling on the Commission to use the MiCA review to allow regulated stablecoins to offer rewards to holders,” Stand With Crypto EU general manager Harry Pearce Gould told Cointelegraph.

Asked whether Europe should look to regulatory models outside the EU, Pearce Gould pointed to the US:

The US has made a clear choice to back stablecoins as the settlement layer for tokenisation. Europe doesn’t need to copy that, but it does need to compete with it.

He added that allowing rewards could help euro-denominated stablecoins gain adoption and compete with dollar stablecoins.

“Strong euro stablecoins matter for the euro’s global standing and the EU’s payment sovereignty,” he said.

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EU central banks seek changes to stablecoin rules

The campaign comes as European central banks are pushing for broader changes to MiCA’s treatment of stablecoins.

In a Sept. 22 response to the European Commission’s MiCA review, the European System of Central Banks (ESCB) called for the existing prohibition on stablecoin interest to extend to lending, borrowing and staking arrangements that generate yield.

The ESCB also proposed replacing MiCA requirements that stablecoin issuers hold a minimum share of their reserves in bank deposits with liquidity thresholds. The central banks argued that the existing rules could strain lenders if a stablecoin run forced an issuer to rapidly withdraw deposits.

The ECB has separately highlighted a potential liquidity mismatch, noting in June that stablecoins settle around the clock while their reserve assets may still operate on traditional settlement timelines.

Source: European Central Bank

The proposals come amid broader concerns from the ECB over stablecoins’ potential impact on financial stability.

In May, ECB President Christine Lagarde warned that a shift of deposits from banks into stablecoins could weaken bank lending and monetary policy transmission, while arguing that Europe should instead prioritize tokenized financial infrastructure anchored by central bank money.

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