Starting next June 30, the Binance exchange will begin to apply a series of rules in order to restrict the use of stablecoins in the countries of the European Union (EU), among which Spain stands out. As reported by Binance in an official statement on June 3, the objective is to make gradual changes to the availability of stablecoins. Therefore, differences will be established in the operations carried out between what is called unauthorized stablecoins and authorized stablecoins.
The new classification arises based on the rules approved last year in the Regulation for the Crypto Asset Market (MiCA), whose specific regulation for stable currencies will come into force on July 1 in the European Union. According to MiCA, for stablecoins to be considered regulated they must be issued and offered to the public only by entities that are registered before any authorized body in any of the 27 member countries of the bloc. Consequently, existing coins – that do not comply with the new rules – will be classified as “unauthorized stablecoins”, facing restrictions on Binance and possibly other exchanges.
Particularly on Binance the idea is to manage the availability of stablecoins «unauthorized» among UE users. The plan is to ensure that the platform does a smooth transition towards the management of operations with regulated stablecoins, which at the same time avoids market interruption. Among the measures that will be implemented on Binance include changes to the conversion function. In this way, unauthorized stablecoin operations will be restricted to sale only. «Users will be able to sell unauthorized stablecoins for other digital assets, regulated stablecoins or fiat currencies, depending on the availability of the jurisdictional fiat channel,» explains the platform's statement. It adds that trading pairs involving unauthorized stablecoins will remain available until further notice. In this sense, it is indicated that trading pairs with regulated and unauthorized stablecoins will coexist during the transition period. It is also explained that custody and portfolio services for stablecoins that are classified as unauthorized will continue operating, allowing users to deposit or withdraw these coins from their wallets on Binance. This, while blocking new loans in stablecoins that are not permitted, including their transfers. It is also expected that all rewards offered on the platform will be changed to regulated stablecoins, BNB or other non-stable tokens. Users have an existing coupon with unauthorized stablecoins, They can claim it until its expiration date.
Tether enters the list of “unauthorized stablecoins”
It should be remembered that the list of currencies that will lose legal status in the European Union includes tether (USDT), the stablecoin with the greatest circulation in the region as it dominates the market. As Paolo Ardoino, CEO of Tether, recently reported, the company is still has not taken any action to comply with regulations, considering that MiCA regulations are too restrictive for a currency like USDT. As reported by this medium, among the main demands that – in Ardoino's opinion – are difficult for Tether to meet, are the requirements of a capital limit and a liquid reserve, as well as the fact that cash deposits are required must be distributed in at least six banking entities. However, it is still thought that negotiations between Tether and European regulators can find a solution that favors both parties. Meanwhile, it is expected that, by not complying with these regulations, USDT joins the list of unregulated stablecoins in the EU that will be restricted on Binance and other exchanges. In that sense, platforms such as Kraken continue to analyze the existing mechanisms that will allow them to continue offering USDT legally in the region. To do this, evaluate the possibility of making settlements in euros. However, exchanges like OKX chose to phase out support for transactions with USDT trading pairs. The opposite is the case of the stable currency USD Coin (USDC), which is already part of the authorized entities in Europe, by having a registration granted by the French authorities. In this way, it is estimated that the entry into force of MiCA will probably generate a significant drop in the flow of transactions with USDT and other dollar-backed stablecoins in European markets. A measure that the EU is betting on, waiting for increase trading with euro stablecoins. In any case, the question about what will happen to stable currencies in the eurozone remains in the air. We still have to wait to evaluate the dynamics that will be put in place in the coming months, once MiCA comes into force in the region.