Binance’s USDT delisting in the EEA aligns with MiCA regulations, shifting stablecoin dominance.

Liquidity constraints in Europe may slow down the impact of USDT's market exit.

Binance is shutting down spot trading pairs for USDT and eight other stablecoins in the European Economic Area (EEA) as part of its efforts to comply with the Markets in Crypto-Assets Regulation (MiCA).

The exchange is shifting its liquidity to concentrate on a smaller selection of tokens that meet the criteria set by the new crypto law, which comes into effect in August 2024.

Binance shutting down USDT trading pairs in EEA

In a recent email to users, Binance announced the planned delisting of these tokens and set a deadline of March 31 for the closure of the trading pairs.

“As part of our ongoing efforts to ensure compliance with local regulations, we will be closing all spot trading pairs for the following tokens in the European Economic Area (EEA) by March 31, 2024,” the exchange said.

The affected stablecoins are: Tether (USDT), Dai (DAI), First Digital USD (FDUSD), TrueUSD (TUSD), Pax Dollar (USDP), Anchored Euro (AEUR), TerraUSD (UST), TerraClassicUSD (USTC), and PAX Gold.

The exchange explained that users in the EEA will no longer be able to buy, sell, or trade these tokens in spot markets by March 31. However, they will still be able to hold and trade the affected stablecoins through perpetual contracts.

“We will also be closing our fiat trading options, such as the euro, later this year. In the meantime, these markets will remain open. Finally, all markets for tokens that are not covered by MiCA will be closed by March 31, 2024,” Binance added.

Moreover, Binance told its users to convert any holdings of the affected tokens into MiCA-approved stablecoins, which are currently USDC or the euro-denominated stablecoin from Centre and Union Bank, known as Union Euri (EURI).

Liquidity concerns in Europe

The move by Binance to delist USDT and concentrate on a smaller selection of tokens could affect market liquidity in Europe.

Many investors are concerned about whether alternative stablecoins can provide the same level of reliability as USDT, which is one of the oldest and most widely used stablecoins on the market.

Earlier this year, several exchanges, including Kraken and Coinbase, had already delisted PaylPal USD (PYUSD) and Tether EURt (EURT) to prepare for MiCA.

Kraken is also shutting down the Union Euri (EURI) futures market and will be closing its OTC trading desk for illiquid tokens.

Meanwhile, Coinbase had already delisted PaylPal USD (PYUSD) and Tether EURt (EURT) in anticipation of MiCA, while a few other crypto exchange continue to trade the token as they wait for further regulatory updates.