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France’s Finance Ministry, the Autorité des Marchés Financiers, the Bank of France and the Autorité de Contrôle Prudentiel et de Résolution said EU stablecoin rewards should be allowed under certain conditions as part of revisions to the Markets in Crypto-Assets regulation, Bitcoin.com reported.
In a joint opinion, the French authorities argued third-party rewards paid to stablecoin holders by crypto exchanges and other intermediaries should be regulated rather than banned outright, according to Bitcoin.com. The authorities said such rewards could emerge naturally in the market even if a full ban were imposed, making a transparency- and investor-protection-based framework the more reasonable approach. They added the rewards could lower holding costs for e-money tokens, or EMTs, support round-the-clock financial services, and weaken the competitiveness of euro stablecoins if related rules were stricter than those in major rival markets such as the U.S.
The French authorities proposed four conditions for allowing such rewards: platforms paying the rewards should clearly disclose relevant information to users; they should not promise guaranteed returns; they should not market the rewards as deposit or savings products; and regulators should monitor the impact on bank deposits. The authorities also said stablecoin issuers should continue to be barred from paying interest solely for holding tokens.