EU Regulators Move to Eliminate Passive Income on Stablecoins

The European Central Bank (ECB) and national central banks have shown their fear of financial innovation and free market alternatives once again. In a lengthy, 57-page position paper submitted to the European Commission for review of the Markets in Crypto-Assets (MiCA) regulatory framework, they aim to completely eliminate any form of return on investment for European users with regard to stablecoins, whether it's lending, staking or loyalty programs.

The duplicitous reasoning states that a stablecoin is solely a payment instrument and 'cannot serve as a means of savings'. The MiCA already prohibits issuers and registered crypto-service providers from paying direct interest on digital dollar- or euro-denominated tokens to holders. However, the ECB's eyes are now fixed on finding alternative ways for users to obtain passive income. As such, they demand that indirect forms of returns be banned as well, along with loyalty actions and unregulated sectors, effectively sealing all loopholes.

This move can hardly be interpreted otherwise than as a desperate attempt by traditional banks to suffocate what's left of the digital alternatives. Instead of offering competitive interest rates and modern user-friendly services, regulators are trying to cripple what's left of the market with administrative restrictions.