Binance may ban Tether and other stablecoins in Europe

abdelaziz Fathi

Binance plans to impose restrictions on the availability of stablecoins in the European Union (EU) that are deemed “unregulated” under the EU’s new Markets in Crypto-Assets Regulation (MiCA).

Binance spectacle

The decision precedes the European Union’s (EU) adoption of the Markets in Crypto-Assets (MiCA) regulation, set to fully come into effect on December 30, 2024. MiCA will introduce tighter controls on the usage of certain stablecoins within the region.

In a statement, Binance noted that the MiCA rules for stablecoins will take effect at the end of June. “This will be a first step entering the new regulatory framework and it will have a significant impact on the stablecoin market in the European Economic Area,” the statement read.

As stablecoins become regulated in Europe, only tokens issued by “regulated companies” will be available to the public, Binance said. The company added, “Several existing stablecoins may not fall into this category and will therefore be subject to certain restrictions.”

Nevertheless, Binance did not clarify which stablecoins fall into the “unregulated” category.

To comply with the new regulations, Binance has outlined a “phased” approach in its statement. This includes allowing users to convert holdings in “unauthorized” stablecoins to other digital assets like bitcoin and ether, regulated stablecoins, or fiat currency. As of June 30, purchasing “unauthorized” stablecoins in Europe will no longer be possible.

The action stirred a flurry of comments from industry professionals and crypto enthusiasts alike. Tajinder Virk, CEO Finvasia also commented: “Drastic as it may seem, the move underscores the importance of understanding the implications of the MiCA norms. On the positive side, it creates more opportunities for EU-based EMIs and stablecoin issuers. EURO-backed stablecoins such as EURC, EUROe, and cEUR aren’t the new kids on the block anymore. It remains to be seen, however, what the regulatory future holds for the crypto space and the crypto derivatives industry.”

Since the sentencing of former Binance CEO Changpeng Zhao to four months in prison in April, the company’s new leader, Richard Teng, has been making efforts to show that Binance is committed to collaborating with regulators.

Rival exchange Kraken also announced in May that it is “actively reviewing” whether to delist the stablecoin Tether (USDT) from its European platform.

Marcus Hughes, Kraken’s Global Head of Regulatory Strategy, told Bloomberg that the exchange is preparing for various scenarios, including discontinuing support for certain tokens such as USDT. “It’s something we’re actively reviewing,” Hughes said, noting that a final decision will be made once the regulatory position becomes clearer.

Kraken’s consideration follows the actions of another major crypto exchange, OKX, which removed Tether trading pairs in Europe in March due to impending stablecoin regulations. An OKX spokesperson explained that the delisting will enable the exchange to introduce euro on-ramps for EEA-based customers. He added that this adjustment impacts only a minor portion of the exchange’s user base.

MiCA mandates that stablecoins issued in Europe must meet heightened regulatory requirements. The implementation of MiCA will occur in phases, with certain applications set for mid-2024 and additional rules to be enforced by December 2024.

Tether holds a major portion of the market, with $116.76 billion worth, representing 69.6% of the total $167.78 billion USD-pegged stablecoin supply.

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