Stablecoin Interest: MiCA Ban and the 256-Euro Limit

The European Union's MiCA regulation, specifically articles 40 and 50, explicitly prohibits issuers of e-money tokens and asset-referenced tokens from granting interest to holders. This mandate aims to prevent stablecoins from functioning as savings products, ensuring they remain strictly as means of payment. The prohibition extends to crypto-asset service providers, meaning exchanges and custodians cannot offer interest on stablecoin balances held on their platforms. Any yield currently observed on platforms for assets like USDC or EURC is derived from third-party lending or credit protocols rather than the token issuer itself. This distinction is critical for investors, as it shifts the risk profile from a regulated deposit to a credit transaction with a third party, which lacks statutory deposit guarantees. Furthermore, the European Banking Authority recently classified USDC as the first significant e-money token in the EU, subjecting it to stricter supervision. While the ban protects the redemption claim of stablecoin holders, it may inadvertently push retail investors toward riskier, unregulated lending products in search of yield. Ultimately, this regulatory framework forces a clear legal separation between stablecoin utility and investment-style returns.