MiCA Interest Ban Stablecoins and MEXC's USDT Cashback Card

MEXC Global recently launched a Visa-linked crypto card offering up to 10 percent cashback and 7 percent annual interest on USDT balances, raising questions about compliance with the European Union's Markets in Crypto-Assets Regulation (MiCAR). Article 50 of MiCAR explicitly prohibits licensed providers from paying interest or holding-period rewards on regulated stablecoins, known as e-money tokens, to prevent them from functioning as interest-bearing bank deposits. Because Tether has not sought MiCAR authorization for USDT, the token falls outside the scope of the e-money token interest ban, allowing non-licensed providers to offer such products to EU users. However, the regulation creates a clear divide between cashback, which is tied to transaction activity, and interest, which is tied to holding duration. While cashback is generally permissible, interest paid on idle balances remains strictly prohibited for any entity operating within the EU's licensed framework. This situation highlights the regulatory gap between authorized e-money tokens and non-compliant stablecoins in the European market. Users are advised to verify provider licensing via ESMA and BaFin databases, as the lack of MiCAR authorization for a token does not exempt providers from broader consumer protection standards. Ultimately, the distinction between transaction-based rewards and balance-based interest remains the critical factor for regulatory compliance under the evolving MiCA regime.