From June 30, 2024, the EU MiCA regulation will bring significant changes to the stablecoin market. This new regulation will not only impact stablecoins but also the digital asset market in the European Economic Area (EEA).
Binance will take new measures to comply with these regulations.
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Impact of EU MiCA regulations
Stablecoin rules under MiCA
Impact on users
Binance’s response measures
Spot trading
Wallet services
Why is Binance taking these measures?
Ensuring compliance and market stability
Assisting in market transition
Starting from June 30, 2024, only Electronic Money Institutions (EMIs) and credit institutions (such as banks) will be able to issue and provide stablecoin services within the European Economic Area (EEA). This means that many existing stablecoins will be classified as “unauthorized stablecoins” and subject to corresponding restrictions.
Starting from June 30, 2024, users in the EEA will only be able to use “authorized stablecoins”. Unauthorized stablecoins will be subject to a series of restrictions, including the prohibition of the use of new products or services. Binance has stated that it will implement phased changes to help users transition smoothly to authorized stablecoins and avoid market turbulence.
In order to comply with MiCA regulations, Binance will impose restrictions on all products involving unauthorized stablecoins to prevent users from participating in new related products or services.
Starting from June 30, 2024, Binance’s conversion function will enter a “sell-only” mode. EEA users will be able to convert unauthorized stablecoins into other digital assets (such as Bitcoin or Ethereum), authorized stablecoins, or fiat currency (depending on the availability of fiat currency channels). The functionality to purchase unauthorized stablecoins will no longer be available.
Unauthorized stablecoins in spot trading pairs will remain available until further notice. They will coexist with authorized stablecoins during the transition period.
Binance’s custody and wallet services for unauthorized stablecoins will continue to operate, and users will still be able to access their stablecoins.
Binance’s strategy aims to comply with MiCA regulations while avoiding market confusion. Due to the limited quantity and liquidity of current authorized stablecoins, Binance’s phased transition measures help prevent users from mass-selling unauthorized stablecoins, which could trigger market panic.
As more authorized stablecoins emerge, the market will gradually shift towards these new stablecoins, achieving the goals of MiCA. As the largest centralized exchange in terms of trading volume, Binance states that it has a responsibility to protect users and ensure market stability.
USDT competitor USDC reposted this announcement at this time.
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MiCA
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Further reading: MiCA to take effect at the end of the month, Tether CEO concerned about stablecoin operation risks. EU crypto regulation MiCA to take effect, Kraken also considering delisting USDT?