Binance, the leading cryptocurrency exchange by trading volume globally, has announced it will restrict access to stablecoins deemed “unregulated” within the European Union starting June 30. This is in compliance with the EU’s Markets in Crypto-Assets Regulation (MiCA).
Binance MiCA Compliance and Impact on the Stablecoin Market
As per the Binance update, the restriction will commence at the end of June when MiCA will take effect. Additionally, the exchange clarified that the regulatory change signposts a new era for the stablecoin market in the European Economic Area.
Thus, beginning July 1, only stablecoins issued by “regulated companies” will be available to users. Although several stablecoins are currently not in this class and will face some forms of restrictions, Binance intends to comply.
The decision to adhere to the MiCA directive may be to avoid the regulatory challenges that have dogged the exchange in recent times. Last month, Crypto-Vanguard reported that Canada’s Financial Transactions and Reports Analysis Centre (FINTRAC) imposed a fine of $4.38 million (CAD$6 million) on Binance.
FINTRAC stated then that Binance failed to register as a foreign money services business with the intelligence body despite multiple deadlines.
Binance Plans Phased Implementation and User Transition
Meanwhile, Binance is silent on the specific stablecoins that would be classified as “unregulated.” However, to guarantee a smooth transition from unregulated to regulated, the exchange says some measures will be implemented in phases across its product offerings.
These include Binance convert, spot trading, and wallet services. While the purchase of unregulated stablecoins through the covert option will be disabled, users will be allowed to convert their holdings into other digital assets such as Bitcoin and ether, regulated stablecoins, or fiat currency.
Many analysts consider this compliance by Binance to be the positive effect of changed leadership at the exchange. Binance CEO, Richard Teng appears keen on demonstrating the company’s willingness to collaborate with regulators.
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