Stablecoin rewards, or yield, are a contentious topic in the US and Europe. In the US, the battle is ongoing, but so far the legacy banking sector has the edge, as direct yield has been banned. The GENIUS Act, the US stablecoin law, bars permitted payment stablecoin issuers and foreign payment stablecoin issuers from paying holders any interest or yield solely for holding the token. Banks have leveraged fearmongering, claiming people will migrate money from savings and checking deposits to stablecoins if they can generate yield, and then extended this to claiming it will undermine lending. This obviously ignores the glaring fact that traditional banks can compete directly with stablecoin issuers by raising interest rates paid to depositors to become competitive or by issuing their own digital currency.
Today, Stand with Crypto reports that over 50,000 letters have been sent to the European Commission demanding that rewards be paid to stablecoin holders. As well, over 126,000 people have signed a Stand With Crypto EU petition calling on the Commission to pursue a pro-innovation strategy for stablecoins in the EU.
MiCA, the Markets in Crypto Assets regulation in force since mid 2024, also bans stablecoin yield. Stablecoin issuers, crypto-asset service providers (CASPs), and third parties cannot provide rewards to stablecoin holders. The Commission just closed its MiCA review on September 30, 2026.
The emails referenced by Stand with Crypto demand that the Commission allow regulated stablecoins to offer rewards to holders.
At the same time, the European central banks have demanded that the ban on stablecoin interest be extended to crypto lending, borrowing and staking, extending the non-competitive approach.
So will policymakers do what is obviously right and improve the environment for the masses, or will they protect legacy banks by increasing the regulatory moat protecting their business, which undermines competition?
Harry Pearce-Gould, General Manager at Stand With Crypto EU, says that tens of thousands of Europeans telling the Commission to fix a single rule does not happen by accident.
“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,” says Pearce-Gould. “… we’ve been bringing [this] message to life in Berlin and Barcelona, with further stops planned across Europe. The cage, filled with locked-up money and padlocks signed by supporters, is a simple visual representation of what this rule means for millions of people: their money locked up. Stand with Crypto EU is campaigning to unlock these rewards for consumers.”
The entire reason the EU was created was to reduce barriers to competition. So far, as the Draghi Report outlines, this mission has fallen short. It will be interesting to see whether, given this opportunity, the Commission chooses to support consumers and allow competition, or sides with legacy banks that fear change.