Over 50,000 residents of Europe have requested that the European Commission ease restrictions on payments to stablecoin holders during the review of the Markets in Crypto-Assets (MiCA) regulation. This information was shared by Harry Pearce Gould, the head of Stand With Crypto EU, to Cointelegraph.
The organization advocates for allowing regulated stablecoin providers to offer incentives such as cashback, loyalty programs, and reduced fees to users.
“We urge the European Commission to use the MiCA review to permit regulated stablecoins to provide rewards to holders,” stated Pearce Gould.
A consultation was conducted from May 20 to September 30, during which the agency gathered responses to prepare a report on the application of the regulation and recent developments in the cryptocurrency market. If necessary, the regulator will propose legislative changes.
In addition, a separate petition by Stand With Crypto EU advocating for a more favorable framework for stablecoins has garnered over 126,000 signatures.
The organization proposes allowing the distribution of income from reserve assets to holders, maintaining access to global stablecoins under transparency and reserve requirements, and supporting euro-backed stablecoins.
Source: Stand With Crypto.Restrictions Imposed by MiCA
MiCA prohibits issuers and crypto service providers from paying interest on asset-referenced tokens (ART) and electronic money tokens (EMT).
For ART, the regulation also equates rewards and other benefits related to the holding period of the token with interest. Examples include compensation and discounts that effectively function like interest. Similar rules apply to EMT.
Thus, while MiCA does not explicitly ban cashback or loyalty programs, the constraints depend on whether the benefits are tied to the holding period of the stablecoin and whether they have an economic effect comparable to earning interest.
Stand With Crypto EU argues that the current regime hinders competition with bank deposits and other financial products.
The organization also supports allowing users to receive a portion of the income that issuers earn from the assets backing stablecoins.
Pearce Gould linked this initiative to the growth of European stablecoins, asserting that the ability to offer rewards could enhance the attractiveness of euro-backed stablecoins amid the dominance of dollar-denominated tokens.
Central Banks Call for Stricter Limitations
On September 22, the European System of Central Banks (ESCB), which includes the European Central Bank (ECB) and national central banks of the EU, presented their own response to the MiCA consultation.
Their stance on stablecoin yield is contrary to the proposals from Stand With Crypto EU.
The ESCB advocates for maintaining the current prohibition and extending it to indirect forms of yield, including through crypto lending, borrowing, and staking. They believe such schemes could replicate the economic effect of interest payments while circumventing existing restrictions.
Additionally, the organization members proposed changes to the reserve requirements for stablecoins. Currently, MiCA mandates that at least 30% of reserves be held in bank deposits, and for significant tokens, this figure rises to 60%.
The central banks suggest replacing the fixed proportion of bank deposits with liquidity requirements for reserves.
Specifically, they propose considering the volume of assets with maturities of up to one to five business days. The ESCB representatives believe this approach would reduce the risks of sudden withdrawals from banks during mass redemptions of stablecoins.
It is worth noting that the transitional period for MiCA ended on July 1 in the EU. Companies lacking the necessary authorization must cease servicing clients in the region.
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