Binance will be toeing the line when Markets in Crypto-Assets Regulation (MiCA) rules of stablecoins (asset-referenced tokens) come into effect at the end of the month. The cryptocurrency exchange has alerted users in the European Economic Area to changes they can expect to their service.
MiCA creates uniform rules for crypto asset issuers that have not already been regulated in the European Union. In response, Binance is dividing stablecoins into “regulated” and unauthorized” coins according to their compliance with the new rules.
Binance will transition users gradually
The exchange “aims to fulfill MiCA objectives smoothly by transitioning users from Unauthorized Stablecoins to Regulated Stablecoins over time, as more Regulated Stablecoins become available in the market.”
Related: EU publishes draft rules for stablecoin issuer complaint procedures
No rulings have been made yet on which stablecoins are or are not compliant with MiCA. Only a few stablecoins would meet MiCA requirements at present, Binance said.
Binance will principally rely on a “sell-only” strategy to comply with MiCA requirements. The strategy will especially apply to the Binance Convert function: “Convert functions for Unauthorized Stablecoins will be available in a ‘sell-only’ mode.”
Binance states that it has 196.6 million users worldwide. It wrote in a blog post:
“Our transitional approach has been designed to minimize any potential harmful impacts to the EEA and global crypto market that could arise from users rushing to swap their stablecoin holdings while limited exit avenues exist.”
MiCA may be good for crypto and stablecoins
MiCA was passed into law in May 2023. Binance may not be the first exchange to take action ahead of its implementation. In March, OKX delisted Tether in Europe without mentioning MiCA. In September, Binance denied reports based on a quote from an interview with Binance France legal head Marina Parthuisot that it intended to delist all stablecoins in Europe.
Expert opinion has been divided on the effect MiCA will have on the European crypto market, but many have spoken favorably of the law, with apprehension centered around only stablecoins. European Commission economist Joachim Schwerin told Cointelegraph, however, “MiCA could help us to become more open to stablecoins as a whole.”