Binance’s EU services face scrutiny over MiCA licensing exemption

European regulators are reportedly looking at how Binance is still serving some customers in the European Union without MiCA authorization, using a reverse solicitation exemption that was meant to be narrow. For PSPs and high-risk merchants, the practical question is simple: when does “customer approached us first” stop being a defense and start looking like a workaround?

1. The European Securities and Markets Authority (ESMA) and regulators in France, Germany and Greece are examining Binance’s use of reverse solicitation under the Markets in Crypto-Assets Regulation (MiCA), the Financial Times reported on Thursday.
2. Reverse solicitation allows non-EU crypto asset service providers (CASPs) to serve customers who approach them entirely on their own initiative. ESMA’s guidelines, though, say firms cannot use it to sidestep MiCA requirements.
3. Binance withdrew its Greek MiCA application in June and said it would seek authorization in another EU member state. Ahead of the end of MiCA’s transitional period on July 1, Binance told Cointelegraph that EU access would depend partly on a user’s jurisdiction, account status and “servicing entity.”
4. According to the FT, some EU traders are now being served through Binance’s Abu Dhabi-regulated entity. Binance did not confirm whether it was in talks with EU regulators, telling Cointelegraph that it “complies with applicable regulatory requirements.”
5. ESMA on Wednesday called for stronger powers over non-EU companies that solicit European investors without MiCA authorization. In its response to the European Commission’s consultation on reviewing the regulation, the regulator said its proposals would support faster, more consistent supervision across the EU and reduce opportunities to exploit regulatory differences.

ESMA’s register of non-compliant crypto providers grew from 164 entries on July 16 to 173 in its Sept. 30 update. Binance does not appear on the latest register, which MiCA describes as “non-exhaustive” and which ESMA updates based on information from national authorities and other sources. Germany’s BaFin declined to provide further information, citing legal confidentiality obligations.