Binance Faces EU Regulatory Probe Over Reverse Solicitation Allegations

Binance, the world's largest cryptocurrency exchange, is facing a regulatory probe by European authorities over allegations it misused the 'reverse solicitation' exemption to serve EU customers without authorization.

The investigation centers around Binance's use of MiCA's reverse solicitation provision, which allows overseas operators to provide services in the EU without prior authorization if the customer initiates contact entirely on their own initiative.

Regulators from the European Securities and Markets Authority (ESMA), France, Germany, and Greece are reviewing whether Binance properly used this exemption. The company withdrew its application for Crypto-Asset Service Provider (CASP) authorization in June, but continued to offer services to some EU customers.

Binance told the Financial Times it is 'actively working toward securing MiCA authorization' and that it complies with applicable regulatory requirements. However, ESMA has warned that the reverse solicitation exemption should be interpreted narrowly and not used as a means to circumvent MiCA requirements.