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MiCA Compliance: Binance Restricts Key Features for EU Users

Last Updated June 26, 2024 11:05 AM
Eddie Mitchell
Last Updated June 26, 2024 11:05 AM
Key Takeaways
  • Certain stablecoins and related features are no longer available for European Binance users.
  • Tether (USDT), Circle (USDC), Dai (DAI), and other stablecoins are leaving EU exchanges.
  • The EU’s stablecoin regulations come into force on June 30, 20224, but the regulatory technical standards are still in the consultation phase.

As the European Union’s sweeping Markets in Crypto-Assets (MiCA) regulations on stablecoins come into effect, Binance has removed certain features for users in the region.

The leading crypto exchange joins many other crypto trading platforms that are now forced to delist “unregulated” stablecoins, products, and services before the end of June 2024.

Binance Stablecoins

From June 30, 2024, restrictions  on peer-to-peer (P2P) trading and over-the-counter (OTC) stablecoin purchases will be implemented. This also includes restrictions on purchases through Binance Convert and certain limitations in margin trading.

It’s worth noting that “unauthorized” stablecoins, which include Tether (USDT), USD Coin (USDC), and First Digital (FDUSD), will remain listed for spot trading, deposits, and withdrawals.

Furthermore, new subscriptions using unauthorized stablecoins within Binance Loans, Simple Earn, Dual Investment, and many others will be blocked. Binance has urged  users to review their holdings and consider moving to other assets.

In addition, Binance will block access to its spot copy trading for residents in the European Economic Area (EEA) from June 26, 2024. Unfortunately, none of the major issuers are in a position to comply with MiCA.

Areas of Concern

Binance isn’t outright removing stablecoin trading pairs and wallets from its platform, not yet anyway. However, if Binance follows in the footsteps of OKX, who removed all (USDT) trading pairs from its platform,

Compliant Euro-denominated stablecoins have low liquidity and adoption. This has raised concerns that a stablecoin exodus could cause turmoil in the markets.

Recently, New York-based crypto exchange Uphold announced that is discontinuing several stablecoin listings, including USDT, Dai (DAI), and Frax Protocol (FRAX) ahead of the MiCA shift.

Interestingly, the exchange said it would continue supporting Circle’s USDC and Euro Coin (EURC ) stablecoins, and PayPal USD (PYUSD).

Stablecoins in Europe

Now that the MiCA framework requires stablecoin issuers to be licensed as Electronic Money Institutions (EMIs), there is a sense of uncertainty among stablecoin issuers.

The most stringent requirements, namely capital and reserve obligations, will come into full effect later. This could give stablecoin issuers the time they need to meet such requirements.

It’s worth noting that these rules come into effect on June 30, and the regulatory technical standards are still in the consultation phase. This means that issuers can work to align their operations with MiCA.

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