Central banks and 50,000 letter-writers pull MiCA's stablecoin yield ban in opposite directions

The two sides disagree about what counts as equivalent remuneration. MiCA, as Crypto Briefing describes the rule, bars issuers from paying interest or any equivalent remuneration on regulated tokens ^[13]. The letters ask for cashback and loyalty perks ^[2]. The central banks, in Crypto Briefing's account, want no form of return, direct or indirect, inside a regulated token, because the ECB holds that e-money should be a payment tool and not a savings product ^[14].

The letter count is roughly 250 times the Commission's 2020 turnout ^[1]. It shows how far a campaign can reach. The ESCB, which includes the ECB ^[8], filed its response on September 22 ^[9], eight days before the consultation closed ^[2]. I'd expect that one submission to carry more weight in drafting than the 50,000 letters, because it comes with a stability argument and a reserve proposal to match. The ESCB wants MiCA's rule that issuers hold a minimum share of reserves in bank deposits replaced with liquidity thresholds. Its argument is that the current rule could strain lenders if a run forced an issuer to pull deposits quickly ^[10]. In June the ECB also noted that stablecoins settle around the clock while their reserve assets may still settle on traditional timelines ^[11]. Both ESCB proposals protect banks. One removes a reason for savers to move deposits into stablecoins, and the other cuts how much issuer cash sits at banks waiting to be withdrawn in a run ^[9][10].

The Commission has three options. It can leave the ban as written, carve out cashback-style rewards as the campaign asks ^[2], or adopt the ESCB's extension, which would bring lending, borrowing and staking arrangements that generate yield inside the prohibition ^[9]. I think a wider ban is more likely than a looser one, because the only institutional submission in these reports asks for the wider version. The counter-case rests on competition with the dollar. Harry Pearce-Gould, Stand With Crypto EU's general manager, argues that rewards would help euro-denominated stablecoins win users and compete with dollar stablecoins ^[6]. "The US has made a clear choice to back stablecoins as the settlement layer for tokenisation. Europe doesn't need to copy that, but it does need to compete with it," he said ^[7].

If the Commission's draft lets regulated issuers offer cashback or loyalty rewards, the letters will have changed the text and I will have been wrong about which way the rule moves. "These are people who use stablecoins, understand what the rewards ban means for them, and want to be heard before the Commission decides what comes next for MiCA," Pearce-Gould said ^[17].