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Binance to set stablecoin restrictions for EEA users

Binance is planning to restrict the trading of stablecoins for its EEA users. The restrictions are due to the EU’s new MiCa regulation, which will enter into force for stablecoins on June 30. It is unclear what major stablecoins meet the regulatory standards.

The world’s leading crypto exchange, Binance, has announced changes to the trading of stablecoins. On Monday, Binance reported the news on social media and emailed information to the exchange’s customers on Tuesday. Below is Binance’s X post with a link to the official announcement.

Binance plans to add restrictions on stablecoin purchases starting June 30th. These changes will apply to EEA customers, including all EU countries, Norway, Iceland, and Liechtenstein. The reason is the EU’s new MiCa regulation, which will enter into force for stablecoins on the last day of June. Most of the regulatory package will enter into force at the end 2024.

Incorrect information has been reported, so let’s clarify what will occur on June 30th.

  • Binance will not delist any stablecoins.
  • You are not obliged to sell any stablecoins you own.
  • You can make withdrawals and deposits with stablecoins as before.
  • The Binance Convert function goes into “sell only” mode for unauthorized stablecoins.

The only major restriction is to Binance Convert, a feature allowing beginners to acquire cryptos easily. Binance will not change the spot trading pairs on its exchange. The following is a quote from Binance’s announcement:

Spot trading pairs with Unauthorized Stablecoins will be available until further notice.

For example, if Tether (USDT) were not an authorized stablecoin, you could not buy it using the Convert function. However, USDT would be available for purchase through spot trading pairs, and you could hold it in your account.

The changes seem very small, at least for now. We will update this article or publish new news if the situation changes significantly.

What is a regulated stablecoin in the EU?

The EU’s new stablecoin regulation will enter force in less than a month. However, the situation in the stablecoin sector is still unclear. For example, Binance does not name any stablecoins that have been approved (or not approved) in its announcement.

It seems that among the big stablecoins, Tether could be outside the scope of EU regulation. If this is the case, and USDT pairs are removed from spot and futures trading from exchanges, it would be a huge loss of liquidity for EEA users.

So far, no evidence exists of such removals. Alexandre Dreyfus, CEO of Chiliz and Socios, considers the whole topic mostly FUD.

According to Tether’s CEO Paolo Ardoino, the MiCa regulation contains several challenging requirements. Ardoino made the following comments for the news publication The Block:

Tether has been actively involved in regulatory technical standards consultations over the past months and remains concerned that MiCA contains several problematic requirements. These requirements could not only render the job of a stablecoin issuer extremely complex but also make EU-licensed stablecoins extremely vulnerable and riskier to operate.

The new stablecoin regulation contains rigorous requirements, such as currency reserves, which are probably not to the liking of operators. Time will tell if changes are made to the regulation or if stablecoin operators are given a longer transition period. The situation seems messy at the moment.

We will report on the topic in more detail as the deadline approaches. It is probably safe to assume that EU and EEA customers are subject to similar rules in all crypto exchanges licensed in the EU.

AboutBitcoin Team

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