‘No justification’ – Crypto lobby pushes for MiCA changes to boost Euro stablecoin growth

Blockchain for Europe (BC4EU) has made several draft proposals for MiCA (Markets in Crypto-Assets) regulation to spur Euro stablecoin adoption.  Currently, the stablecoin sector has a market supply of over $320 billion, with 99% dominated by the U.S. dollar, followed by the Euro at 0.22%.  BC4EU is a Brussels-based trade association representing the international crypto industry. The group believes that Euro-stablecoins can remain competitive against the currently dominant U.S. dollar-based rivals.  Proposals to scale Euro stablecoins One of the proposals in the report is to allow yield on Euro stablecoins. According to MiCA’s Article 50, stablecoins are not classified as a store of value. Hence, they aren’t remunerated or allowed to offer yield on balances held.  The ECB recently warned of deposit flight risk if broader stablecoin yield adoption is allowed. But, according to BC4EU, there is ‘no justification for banning yield.’  Permit remuneration of euro-denominated EMTs (electronic money tokens): While regulation should remain strict to ensure liquidity and capital adequacy of stablecoins, there is no convincing economic justification for prohibiting the remuneration of stablecoins. The group noted that Circle’s USDC and Tether’s USDT dominate DeFi liquidity because most lending platforms and other protocols offer yield on these stablecoins.  Additionally, the first-move advantage also allowed USD stablecoins to have a bigger market share, which Euro stablecoins could struggle to break. Still, since USD stablecoins don’t allow direct yield, as banned in the GENIUS Act, the Euro area could outpace the U.S in this domain, the group noted.  While euro-denominated do not (yet) have such DeFi liquidity, it would be especially important to allow them to compete on a dimension where US stablecoins are constrained (on yield), promoting monetary sovereignty. It's worth noting that Blockchain for Europe is backed by Coinbase, Ripple, Kraken, and other major crypto firms. In fact, Coinbase is the current chair of the board. Interestingly, Coinbase is also pushing for a similar stablecoin yield policy in the U.S. through the CLARITY Act.  This move can be considered Coinbase pushing for a global framework that protects its USDC business interests. Beyond yield, the trade group has also called for removing the current €200 million/day cap on stablecoin transactions to encourage wider adoption. In addition, it proposed an innovation exemption for early‑stage crypto projects. This allows stablecoins to coexist alongside the Digital Euro, the planned CBDC for the Euro area.  That said, Euro-stablecoins have seen strong growth after MiCA went live, but it is unclear whether regulators will adopt the above proposals.  Final Summary Blockchain for Europe has requested MiCA changes, especially allowing yield and removing transfer caps, to make Euro stablecoins globally competitive.  However, calls for stablecoin yield could spark debate as the ECB strongly opposes it to prevent deposit flight.