Binance prepares MiCA rules and updates stablecoin strategy.

Binance will be on its best behavior when the Markets in Crypto Assets Regulatory (MiCA) rules for stablecoins (asset-referenced tokens) come into effect later this month. The cryptocurrency exchange has warned users in the European Economic Area about changes they can expect to its services.

MiCA creates uniform rules for issuers of crypto assets not yet regulated in the European Union. In response, Binance is dividing stablecoins into “regulated” coins and unauthorized coins, depending on whether they comply with the new rules.

Binance will gradually convert users

The exchange “aims to achieve MiCA goals seamlessly by transitioning users from unauthorized to regulated stablecoins over time as more regulated stablecoins become available in the market.”

Related: EU announces draft rules for stablecoin issuer complaints procedures

There is no ruling yet on whether stablecoins are MiCA compliant. Currently, only a few stablecoins will meet MiCA requirements, Binance said.

Binance will principally rely on a “sell only” strategy to comply with MiCA requirements. This strategy applies specifically to the Binance conversion feature. “Unauthorized conversion of stablecoins is available in ‘sale only’ mode.”

Binance says it has 196.6 million users globally. In a blog post he wrote:

“Our transitional approach is designed to minimize any potentially detrimental impact on the EEA and global cryptocurrency markets that could arise as users rush to hold stablecoins while exits remain limited.”

MiCA may be suitable for cryptocurrencies and stablecoins.

MiCA was passed into law in May 2023. Binance may not be the first exchange to take steps ahead of implementation. Last March, OKX delisted Tether in Europe without mentioning MiCA. Last September, Binance rejected reports that it was planning to delist all stablecoins in Europe, citing quotes from an interview with Binance France head of legal affairs Marina Parthuisot.

Experts were divided on the impact MiCA would have on the European cryptocurrency market, but many responded favorably to the law, with concerns focused solely on stablecoins. However, Joachim Schwerin, an economist at the European Commission, told Cointelegraph: “MiCA could help us be more open to stablecoins as a whole.”

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