The European Union is facing growing pressure to ease rules for stablecoins during the MiCA regulation revision. According to the Stand With Crypto EU organization, over 50,000 people have urged the European Commission to allow providers of regulated stablecoins to offer customers cashback, loyalty benefits, or fee discounts. Meanwhile, European central banks are advocating for the opposite direction, seeking to expand some restrictions further.
Over 50,000 Europeans have appealed to the European Commission during the consultation on the revision of the European Markets in Crypto-Assets regulation, primarily known by its acronym MiCA, requesting a change to the rules concerning stablecoins. This is according to Stand With Crypto EU, the organization leading the campaign for easing the restrictions. The European Commission’s consultation on the MiCA revision began on May 20 and concluded on September 30, 2026. Its results are intended to serve, among other things, in evaluating whether the current form of MiCA remains suitable for the further development of the crypto market after its initial years of operation.
At the heart of the dispute are rewards associated with holding stablecoins. Stand With Crypto EU demands that regulated providers be allowed to offer users, for example, cashback, loyalty programs, or lower fees.
In addition to over 50,000 submissions sent during the consultation, the organization states that over 126,000 people also signed a separate petition calling for a more favorable European approach to stablecoins.
Article Content:
- MiCA today prohibits interest on stablecoins
- The Organization Points to Exceptionally High Interest
- Europe Lags Behind the US, According to Stablecoin Proponents
- Central Banks, Conversely, Want to Expand Some Restrictions
- Stablecoin Reserves are Also at Play
- Stablecoins operate 24/7, traditional finance does not
- ECB fears outflow of money from banks
- MiCA review will show which direction the EU will take
MiCA today prohibits interest on stablecoins
Current European rules are quite strict. MiCA prohibits both issuers of regulated stablecoins and providers of crypto services from paying interest to holders. Furthermore, the regulation considers not only classic regular interest payments but also other rewards or benefits linked to the duration a person holds a stablecoin, as interest.
For asset-referenced tokens, this rule is contained in Article 40 of MiCA, while Article 50 establishes a similar prohibition for so-called e-money tokens. The regulation also explicitly mentions compensation or discounts that would have an economically similar effect to interest.
It is precisely against this part of the rules that Stand With Crypto EU is speaking out. The organization argues that stablecoins are at a disadvantage due to the prohibition compared to bank deposits and other financial or payment products, where customers can receive various financial benefits.
“We call on the Commission to use the MiCA revision to allow regulated stablecoins to offer rewards to holders,” said Harry Pearce Gould, CEO of Stand With Crypto EU.
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The Organization Points to Exceptionally High Interest
Stand With Crypto EU also emphasizes the sheer number of people involved. According to the organization, over 50,000 responses represent more than six times the number of replies received by the European Central Bank during its public consultation on the digital euro.
That consultation, held in 2020 and 2021, involved 8,221 respondents. According to Stand With Crypto EU, the current campaign is also significantly outperforming the European Commission’s original crypto regulation consultation from 2020, which saw 198 responses submitted, the organization stated.
The figure of over 50,000 letters, however, comes from Stand With Crypto EU itself and has not yet been independently confirmed by a published summary from the European Commission.
Europe Lags Behind the US, According to Stablecoin Proponents
However, the debate is not just about whether a stablecoin holder receives cashback or a fee discount. According to Stand With Crypto EU, it also concerns the competitiveness of the European crypto market against the United States.
In this context, Harry Pearce Gould highlights the American approach and argues that the ability to offer rewards could increase interest in euro-denominated stablecoins. These currently face a significant dominance of dollar-denominated stablecoins.
ECB President Christine Lagarde warned this year that the value of the global stablecoin market has exceeded 300 billion dollars, with the vast majority of the market consisting of tokens denominated in US dollars. According to the ECB, the two largest dollar currencies, Tether and USD Coin, control approximately 90 percent of the entire market.
Pearce Gould therefore believes that stronger euro stablecoins are important not only for the crypto market but also for the international standing of the euro and European payment sovereignty. It is precisely on this point, however, that the views of the crypto industry and central banks diverge significantly.
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Central Banks, Conversely, Want to Expand Some Restrictions
While Stand With Crypto EU calls for easing the rules, the European System of Central Banks has advocated for a stricter approach.
In its response to the European Commission’s consultation on September 22, the ESCB supported maintaining the prohibition on stablecoin interest. It also addresses how to newly incorporate areas of crypto lending, borrowing, and staking into European regulation.
The difference between the two approaches is therefore quite fundamental. The crypto industry wants to create space for new benefits for customers, while central banks are trying to ensure that the prohibition of interest on stablecoins cannot be circumvented using other yield-generating products.
Stablecoin Reserves are Also at Play
Central banks are also requesting changes to other parts of MiCA. Current rules require stablecoin issuers to hold a certain portion of their reserves as bank deposits.
According to the ECB, at least 30 percent of reserves must be held as bank deposits, with the proportion rising to 60 percent for significant stablecoins.
However, the European System of Central Banks, during the MiCA review, proposes that these minimum requirements for bank deposits be removed and replaced with rules focused on reserve liquidity. Issuers would, for example, have to hold a specified portion of assets with maturities of one to five business days.
The reason for this is a concern about a crisis situation where a large number of stablecoin holders decide to redeem their tokens for cash simultaneously. The issuer might then be forced to quickly withdraw large volumes of its reserves from banks. This could create pressure not only on the stablecoin issuer itself but also on the banks where its reserves are held.
Stablecoins operate 24/7, traditional finance does not
The European Central Bank already pointed out another issue in June: stablecoins are traded and settled 24 hours a day, seven days a week, while the assets forming their reserves may still operate according to traditional settlement periods.
Specifically, the ECB warned that stablecoins can be settled continuously, while some reserve assets still operate on a T+1 or T+2 basis. This timing mismatch can be particularly problematic during periods of rapid withdrawals.
A stablecoin holder might want to get their money instantly, for example, during a weekend or at night, while it might not be possible to settle a portion of the reserves equally quickly.
Yet, the ability of stablecoins to operate continuously is one of their main advantages over traditional payment systems. From a financial stability perspective, however, this same characteristic raises new questions if the liquidity of the assets in their reserves is not equally swift.
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ECB fears outflow of money from banks
The question of stablecoins’ impact on traditional banking also significantly enters the debate. ECB President Christine Lagarde warned in May that if households were to shift money from bank accounts into stablecoins on a larger scale, it could limit the amount of stable deposits from which banks finance loans.
The ECB also warns that a more extensive shift of bank deposits into digital assets could change how banks are financed and affect the transmission of monetary policy, i.e., how central bank interest rate decisions are passed on to loans and the entire economy.
Lagarde, therefore, argues that Europe does not necessarily need to copy the American strategy based on supporting domestic stablecoins. Instead, she advocates for the development of a tokenized financial infrastructure, at the heart of which central bank currency would remain.
According to the ECB, private digital assets may play a significant role in the future financial system, but central bank money should continue to function as its main safe foundation.
MiCA review will show which direction the EU will take
The European Commission will now evaluate the responses received during a multi-month consultation. Its task is to assess whether MiCA, after initial experience with the functioning of the crypto market, still serves its purpose.
According to the European Commission, the responses received are to be used in preparing a report on the functioning of MiCA and current developments in the crypto market. If the Commission concludes that changes are needed, it may accompany the report with a new legislative proposal.
The dispute over stablecoin rewards clearly illustrates the different ideas that exist regarding the further development of the European crypto market. Part of the industry demands more room for competition with American, and primarily dollar-pegged, stablecoins. Central banks, on the other hand, warn of risks to bank liquidity, financial stability, and the functioning of monetary policy.
Brussels’ decision could therefore influence not only whether Europeans will be able to receive cashback or other benefits for holding regulated stablecoins. At stake is also the question of what significant role stablecoins will play in the future European financial system – and whether the euro will be able to compete with dominant digital tokens linked to the US dollar.
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