ECB Seeks to Extend Stablecoin Interest Ban Amid Industry Pushback

The European Central Bank (ECB) is pushing for an extension of the MiCA ban on paying interest to stablecoin holders. The rule, which currently prohibits paying interests on stablecoins, also restricts other activities like lending and staking.

However, Circle and Aave Labs disagree with this proposal, arguing that expanding the ban would give US-issued stablecoins an unfair advantage in the market.

The ECB's position is based on its definition of electronic money as a means for making payments, not saving. It claims that paying people to hold tokens aligns with deposit accounts, which are governed by different rules.

Circle argues that regulators should focus on clearing more stablecoins under the MiCA framework, rather than tightening restrictions. Aave Labs also pushed back against expanding the ban, highlighting the distinction between lending returns and simply paying people to hold a coin.