USDT to lose a major market? EU's MiCA stablecoin regulations about to take effect: How will Binance ensure compliance

Starting from June 30, 2024, the EU's MiCA regulation will bring significant changes to the stablecoin market. This new regulation will not only impact stablecoins but also affect the entire digital asset market in the European Economic Area (EEA). Binance will take new measures to comply with these regulations.

Impact of the New EU MiCA Regulations

Stablecoin Rules under MiCA?

Starting June 30, 2024, only Electronic Money Institutions (EMIs) and credit institutions such as banks will be allowed to issue and provide stablecoin services within the European Economic Area (EEA) under MiCA regulations. This means many existing stablecoins will be classified as "unauthorized stablecoins" and subject to corresponding restrictions.

Impact on Users

From June 30, 2024, users in the EEA region will only be able to use "authorized stablecoins." Unauthorized stablecoins will face a series of restrictions, including a ban on the use of new products or services. Binance has stated that it will implement phased changes to help users smoothly transition to authorized stablecoins and avoid market turmoil.

Binance's Response Measures

To comply with MiCA regulations, Binance will impose restrictions on all products involving unauthorized stablecoins to prevent users from engaging in new related products or services.

Starting June 30, 2024, Binance's fiat-to-crypto feature will switch to "sell-only" mode. EEA users can 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 function to purchase unauthorized stablecoins will no longer be available.

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Spot Trading

Unauthorized stablecoins in spot trading pairs will remain available until further notice. They will coexist with authorized stablecoins during the transition period.

Wallet Services

Binance's custody and wallet services for unauthorized stablecoins will continue to operate, allowing users to access their stablecoins.

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Why Is Binance Taking These Measures?

Ensuring Compliance and Market Stability

Binance's strategy aims to comply with MiCA regulations while avoiding market chaos. Due to the limited number and liquidity of authorized stablecoins at present, Binance's phased transition measures help prevent users from collectively selling unauthorized stablecoins, causing market panic.

Assisting Market Transition

With more authorized stablecoins emerging, the market will gradually shift towards these new stablecoins, achieving MiCA's goals. As the largest centralized exchange by trading volume, Binance states it has a responsibility to protect users and ensure market stability.