EU Central Banks Push Broader Stablecoin Rewards Ban Under MiCA

The European Central Bank and EU national central banks have called for tighter restrictions on stablecoin rewards, including returns generated through crypto lending, borrowing, and staking.

In a response to the European Commission's review of the Markets in Crypto-Assets regulation (MiCA), the European System of Central Banks (ESCB) argued that electronic money should primarily function as a payment instrument rather than a savings product.

The ESCB wants to expand the restriction on crypto-asset service providers paying remuneration on stablecoins beyond activities directly regulated under MiCA, covering indirect yield mechanisms such as lending, staking, and other arrangements that could generate returns for stablecoin holders.

The central banks believe allowing these products could blur the distinction between electronic money and traditional bank deposits while creating competitive imbalances within the EU financial system.