USDT Faces Potential Loss of Major Market? EU’s MiCA Stablecoin Regulation to Take Effect: How Will Binance Ensure Compliance?
The EU MiCA Regulation will bring significant changes to the stablecoin market starting from June 30, 2024. This new regulation will not only impact stablecoins but also the entire digital asset market in the European Economic Area (EEA).
In order to comply with these regulations, Binance will be implementing new measures.
Table of Contents
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Implications of the EU MiCA Regulation
Stablecoin Rules under MiCA
Impact on Users
Binance’s Response Measures
Spot Trading
Wallet Services
Why Binance is Taking these Measures?
Ensuring Compliance and Market Stability
Assisting with 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.
From June 30, 2024, users in the EEA will only be able to use “authorized stablecoins.” Unauthorized stablecoins will be subject to a range of limitations, including a prohibition on 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.
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 fiat-crypto 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 currencies (depending on the availability of fiat currency channels). The function to purchase unauthorized stablecoins will no longer be available.
Unauthorized stablecoins in 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. Given the limited quantity and liquidity of current authorized stablecoins, Binance’s phased transition measures help prevent user concentration in selling unauthorized stablecoins, which could trigger market panic.
As more authorized stablecoins emerge, the market will gradually shift towards these new stablecoins, fulfilling the goals of MiCA. As the largest centralized exchange by 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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Further Reading
MiCA to Take Effect at the End of the Month, Tether CEO Concerned about Stablecoin Operational Risks
EU Crypto Bill MiCA to Take Effect, Kraken Considering Delisting USDT?
