Binance ends Tether USDT trading in Europe to comply with MiCA rules

Binance and Kraken Adjust to MiCA Compliance

Cryptocurrency exchanges Binance and Kraken have implemented major changes to comply with the newly enforced Markets in Crypto-Assets Regulation (MiCA) in the European Economic Area (EEA). As part of the regulation's stipulations, both exchanges have halted spot trading for several non-MiCA-compliant tokens, including Tether's USDt (USDT). Despite these delistings, users in the EEA are still able to hold and trade these tokens via perpetual contracts, as the exchanges navigate the evolving regulatory landscape.

Binance Delists Non-Compliant Tokens in the EEA

Binance, one of the world's largest cryptocurrency exchanges, confirmed in early March that it would delist spot trading pairs for non-MiCA-compliant tokens by March 31. This includes tokens such as USDT, which were no longer available for spot trading within the EEA after the deadline passed. However, Binance has reassured its users that they can still custody these tokens and trade them through perpetual contracts, which are exempt from the MiCA regulations regarding spot trading.

The decision follows the strict MiCA compliance requirements in the region, which demand that digital assets adhere to a specific set of regulatory standards. By ensuring that users can still access and trade these assets via other means, Binance is working to balance compliance with maintaining user access to digital tokens.

Kraken Follows Suit with Similar Delistings

Kraken, another major cryptocurrency exchange, has taken similar steps in response to the MiCA regulations. Following a February announcement, Kraken officially restricted trading for non-compliant tokens like USDT in the EEA on March 24. At this time, Kraken users could only sell these tokens, as the exchange shifted them into a "sell-only" mode for the region.

Kraken’s roadmap for delisting non-compliant tokens includes a more limited list than Binance's, focusing on just five specific assets: USDT, PayPal USD (PYUSD), Tether EURt (EURT), TrueUSD, and TerraClassicUSD. The exchange had previously announced plans to restrict these tokens by the end of the first quarter of 2025, but the early actions reflect the ongoing efforts to align with regulatory expectations in the EEA.

Custody and Transfer Services Remain Available

Despite these delistings, both Binance and Kraken have made it clear that users in the EEA can still custody and transfer non-MiCA-compliant stablecoins. The European Securities and Markets Authority (ESMA), which is responsible for overseeing the implementation of MiCA, has clarified that the custody and transfer of these tokens do not violate the new laws.

This ruling means that while trading certain tokens may be restricted, users are not prohibited from holding or transferring these assets on exchanges that provide such services. In addition, the MiCA regulations do not extend to perpetual contracts, which are a popular trading method for digital assets that are not directly tied to the underlying asset’s spot market value. As a result, users in the EEA will still have the opportunity to trade affected tokens via derivatives and other contract-based products.

Industry-Wide Impact of MiCA Regulations

The changes at Binance and Kraken reflect a broader industry trend in the EEA as cryptocurrency exchanges adjust to MiCA's regulatory framework. MiCA, which aims to create a unified set of rules for digital assets within the European Union, has had significant implications for exchanges operating in the region. It is part of a global push to regulate cryptocurrencies more effectively and ensure investor protection, market integrity, and financial stability.

However, some regulatory ambiguity remains. In particular, ESMA's previous advisories urged European crypto-asset service providers to cease all transactions involving non-compliant tokens after March 31, leading to confusion about the exact requirements. By allowing custody and transfer services to continue, ESMA has provided clarity, allowing exchanges like Binance and Kraken to ensure compliance while still offering essential services to users.

Looking Ahead: Compliance with MiCA

As MiCA continues to shape the European cryptocurrency market, exchanges and users alike will need to adapt to evolving regulations. With more cryptocurrencies and tokens expected to fall under MiCA’s scope in the future, further adjustments are likely across the industry. The ongoing delistings of non-compliant tokens may just be the beginning of a much broader effort to bring greater regulatory oversight to the cryptocurrency market, ensuring that it aligns with traditional financial systems while still ffostering innovation 

Source https://cointelegraph.com/

This is non-financial/medical advice and made using AI so could be wrong