European Central Banks vs DeFi Stakeholders in MiCA Rulebook Showdown

More than 50,000 Europeans have spoken out against a proposal by European central banks to extend a ban on paying interest on stablecoins to other activities like crypto lending and staking.

The European Central Bank (ECB) has pushed for the extension of the MiCA rulebook to prohibit payment of interests on stablecoins in the rulebook, as well as expanding the prohibition to include activities such as lending, borrowing and staking. This would also cover prohibitions of other forms of perks like rewards, fee reductions and loyalty benefits.

The ECB argued that electronic money is intended for making payments, not saving, and that paying people for holding a token aligns with its definition of a deposit account. It also suggested that stablecoins issued in other jurisdictions should be treated the same as those issued in the EU.

Circle and Aave Labs have pushed back against this proposal, arguing that it would give dollar stablecoins an advantage over MiCA-compliant stablecoins. The DeFi giant Aave Labs argued that lending returns are paid by borrowers who post collateral and are taken on by a lender, unlike paying people to hold a coin.