On December 4, Binance listed the euro-backed AEUR stablecoin from Swiss company Anchored Coins. The move is likely to go in line with the exchange's preparations for Markets in Crypto-Assets (MiCA) regulations, which will begin to apply to the European Union in June 2024. However, on the second day of the launch, the stablecoin rose by 200%, and trading in pairs with it was suspended.
A stablecoin is a token that is backed by another asset. Most often these are fiat currencies (dollars, euros, etc.), less often precious metals (gold). Also, some stablecoins use other cryptocurrencies as a reserve.
Stablecoins are of two types: centralised and decentralised. Read more in our article: What are stablecoins.
What is the AEUR stablecoin
AEUR is a centralised Euro-backed stablecoin issued by Swiss company Anchored Coins, owned by Singaporean businessman and former parliamentarian Calvin Cheng. As stated on the company's website, "each AEUR is backed 1:1 by EUR held in the appointed reserve bank".
AEUR, like this company's other stablecoin, ACHF (backed by Swiss francs), was launched in August this year. At the moment, it runs on two blockchains: Ethereum and BNB Chain, and its supply is 13 million coins.
In a press release, Calvin Cheng said that Switzerland is attractive because of its transparent regulation of stablecoins. He also announced plans to comply with the European Union's new rules called MiCA once they come into force in 2024.
Binance to meet MiCA regulations
In September, news about Binance’s delisting of stablecoins that do not meet EU MiCA rules made some noise within the community. The exchange announced the removal of all stablecoins not complying with the new EU rules for European clients by June 30, 2024. Additionally, Binance initiated discussions with issuers adhering to the upcoming legislation.
The appearance of Anchored Coins’ stablecoin on Binance reflects the exchange’s strides in this direction. However, the introduction of AEUR on the platform encountered unexpected turns.
The launch of AEUR on Binance: a 200% pump and trading suspension
On December 4, Binance announced the listing of AEUR, including trading pairs such as AEUR/USDT, BTC/AEUR, ETH/AEUR, and EUR/AEUR, coupled with zero commissions trading for this stablecoin.
Shortly after its debut, the AEUR/USDT pair has been trading at around $1.08, closely mirroring the EUR/USD exchange rate. Yet, on December 5, around 17:45 UTC, the asset started to rise sharply. In a moment, its price reached $3.25.
A 200% pump is an atypical situation for a stablecoin, created to mirror the backing asset rate, in this case, the euro. The sharp upward dynamics can be clearly seen on the minute chart in the screenshot from X below.
At 18:31 UTC on December 5, Binance suspended trading in all AEUR pairs due to high volatility, which should not be the case with a stablecoin.
The exchange attributes this anomaly to the fact that not all users realised it was a stablecoin and offered a compensation plan for those who purchased AEUR at an inappropriate rate and did not have time to sell it. The date of the resumption of AEUR trading was not disclosed in the announcement.
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