Regulation
Binance implements MiCA regulations on stablecoins
MiCA rules require proactive restrictions on Binance’s unauthorized stablecoins. Binance aligns with upcoming MiCA regulations. EEA users face transitional changes in the context of stablecoin regulation.
Binanceone of the leading cryptocurrency exchanges, has shared substantial updates on services for users within the European Economic Area (EEA) in response to changes in the new rules on stablecoin regulations by the EU Markets in Crypto-assets (MiCA) which will come into force on 30 June 2024. These changes are intended to allow compliance with new regulatory requirements and user transition.
Binance Restrictions on Unlicensed Stablecoins
From June 30, 2024, EEA users of Binance products will have limited access to unauthorized stablecoins as per the update. Unauthorized stablecoins concern the classification of stablecoins not included in the “Regulated Stablecoins” according to the new MiCA regulation.
To facilitate this change, Binance will gradually change the operating status of unauthorized stablecoins. Changes include:
Convert Binance: While Binance users are allowed to exchange unauthorized Stablecoins for other assets, such as other digital currencies, regulated Stablecoins, or fiat money, they are prohibited from purchasing unauthorized Stablecoins.
Spot trading: For now, trading pairs containing unauthorized Stablecoins will remain permitted, while trading pairs containing regulated Stablecoins will be affected.
Wallet: Custody and wallet services for unauthorized stablecoins will remain open and users will be able to cash out or top up their stablecoins into their Binance wallets.
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Binance implementation of general product restrictions
In addition to all the product-specific changes, Binance will also have general product limitations for the entire catalog. This involves changes to rewards, such as spot copy trading, margin trading, springboard, simple profit and loans. These restrictions limit the ability of consumers to engage in new products or services provided with unauthorized stablecoins.
The changes follow the rules outlined by the MiCA stablecoin, under which stablecoin issuers are subject to regulation by electronic money institutions (EMIs), meaning they must adhere to current laws relating to EMD.
Context: MiCA regulations and compliance
MiCA became law in May 2023, further solidifying previously existing rules for fiat stablecoins. These rules mean that only EMIs and lenders are allowed to launch fiat stablecoins in the EEA.
The lack of the necessary license to issue electronic money will likely draw attention to the law to help prevent negative consequences arising from lack of transparency, ensure the financial stability of organizations and protect consumer rights.
Some European companies, including Monerium, Membrane, and Quantoz Payments, have already started issuing fiat stablecoins under EMD; these companies have undertaken the strategy of priority regulation. Some of them, for example Circle, are still in the process of obtaining EMI licenses to legalize it.
Disclaimer: This content is informational and should not be considered financial advice. The opinions expressed in this article may include the personal opinions of the author and do not reflect the opinion of The Crypto Basic. Readers are encouraged to do thorough research before making any investment decisions. Crypto Basic is not responsible for any financial losses.
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