Four French financial authorities have asked the European Commission to consider allowing crypto platforms and other third parties to pay rewards to stablecoin holders under tightly defined conditions as part of the upcoming review of the EU’s Markets in Crypto-Assets regulation, or MiCA.

The position puts France at odds with the European Central Bank and the EU’s national central banks on the issue. While the French authorities support keeping the current ban on interest paid directly by stablecoin issuers, they argue that third-party rewards should be regulated rather than banned outright.

A break with the ECB and national central banks

The French authorities’ submission marks a clear divergence from the stance taken by the European System of Central Banks, which includes the ECB and the bloc’s national central banks. Their argument is not that all forms of stablecoin remuneration should be opened up, but that indirect rewards paid by platforms or other intermediaries should be assessed separately from issuer-paid interest.

Under the current MiCA framework, paying interest on stablecoins is prohibited. France’s proposal would leave that core restriction in place for issuers while creating room for a different treatment of rewards offered by third parties. The authorities also said they continue to support regulation of related activities such as staking and lending.

Why France says a blanket ban may be counterproductive

According to the French authorities, indirect remuneration can reduce the cost of holding e-money tokens, or EMTs, and help support always-on financial services. In their view, those practical uses matter for the competitiveness of euro-denominated EMTs in a market where users can compare products across jurisdictions.

They also warned that a framework that is stricter than those of competing markets could weaken euro-denominated stablecoins. Rather than treating all reward mechanisms as inherently problematic, the French position suggests that carefully designed safeguards could address risks without removing incentives that may help the sector develop.

The four conditions proposed for rewards

The French authorities said any permission for stablecoin rewards should come with clear limits. First, platforms paying rewards should be transparent with holders about the terms. Second, returns should not be guaranteed. Third, the rewards should not be marketed as savings products.

A fourth condition would require monitoring the effect of such rewards on bank deposits. That point reflects an underlying policy concern in Europe that stablecoin-related products could draw funds away from the traditional banking system if they begin to resemble deposit substitutes.

What happens next in the MiCA review

The issue is likely to be revisited through the European Commission’s formal review of MiCA. The Commission is required to report on the regulation by June 30, 2027, and that process could include proposals for amendments.

For now, the French intervention does not change the current rules. It does, however, set out a specific alternative to the stricter line favored by the ECB and other central banks: keep the ban on issuer-paid interest, but consider allowing third-party rewards if they are transparent, non-guaranteed, not sold as savings products, and monitored for any effect on deposits.

Source: news.bitcoin.com