Europeans Urge EU to Relax Stablecoin Reward Limits Amid Central Bank Concerns

More than 50,000 Europeans have signed a petition urging the European Commission to relax limits on stablecoin 'rewards' as it reviews the MiCA rules. The push comes from advocacy group Stand With Crypto EU, which argues that the current approach puts regulated euro-linked stablecoins at a disadvantage compared with bank deposits and other e-money products.

The MiCA rules currently prohibit issuers and crypto service providers from paying interest on stablecoins, which Stand With Crypto EU says discourages usage of compliant stablecoins. The group's general manager, Harry Pearce Gould, stated that the Commission should permit regulated stablecoins to offer rewards to holders in the form of incentives such as cashback, loyalty benefits, and fee reductions.

The call for a more permissive approach aligns with European central banks' concerns about stablecoin financial stability implications. The ESCB has proposed expanding the prohibition on stablecoin interest to include lending, borrowing, and staking arrangements that generate yield, while also revising reserve liquidity expectations.