EU regulators are investigating Binance's use of reverse solicitation exemption to continue EU operations after failing to obtain MiCA compliance, with potential enforcement action possible.
Regulation & Gov ·
Binance is facing scrutiny from EU regulators over its use of a legal exemption to maintain service to certain European customers despite failing to obtain a Markets in Crypto Assets (MiCA) license. The European Securities and Markets Authority and national regulators in France, Germany, and Greece are examining whether the exchange can invoke the "reverse solicitation" exemption under MiCA rules. If authorities determine that Binance's reliance on this exemption is unjustified, enforcement measures are possible.
The scrutiny comes after Binance was required to cease EU operations following its inability to secure licensing. MiCA provisions originally obligated unlicensed platforms to wind down and stop serving customers starting July 1, with exceptions only for asset transfers or sales. Earlier reports suggested that the withdrawal of Binance's application in Greece occurred after its initial approval through technical review, with the mandatory assessment period having elapsed without objections.
ESMA has simultaneously requested expanded enforcement authority to combat crypto-related violations, seeking powers to freeze assets when crime links are suspected and to remove websites associated with unauthorized firms or scams. Concerns have emerged among European regulators regarding inconsistent MiCA application across member states. The authority's proposals, part of a broader MiCA consultation response, also address marketing practices and disclosure requirements for crypto service providers.