Binance Exploits EU Loophole, Continues Trading Despite Missing MiCA Deadline

Binance, the world's largest crypto exchange, is still serving European customers despite missing its MiCA deadline on July 1. The company had announced it would stop onboarding new customers and wind down full services in the EU by that date, but has since found ways to continue operating using a loophole called reverse solicitation.

Reverse solicitation exists for one narrow case: when an EU customer reaches out to an unlicensed foreign firm entirely on their own, with no marketing or solicitation involved. However, Binance has been using this exemption to preserve its existing customer base in the EU, which was built through ads, referral bonuses, and app downloads.

The European Securities and Markets Authority (ESMA) has made it clear that reverse solicitation is not meant for preserving an existing book of business. ESMA has contacted Binance directly, seeking confirmation that the exchange is actually winding down its operations in the EU, rather than just rebranding them as opt-in.

Binance has also been routing some trades through an Abu Dhabi entity, but this license carries no weight under MiCA. The UAE is considered a third country, and a license from its regulator does not grant passporting rights within the 27-member EU bloc.