Binance Faces EU Regulatory Scrutiny Over Exemption Use

Regulators in the European Union are scrutinizing Binance's use of a legal exemption to serve customers without proper authorization. According to the Financial Times, the European Securities and Markets Authority (ESMA) and regulators in France, Germany, and Greece are examining Binance's reliance on reverse solicitation under the Markets in Crypto-Assets Regulation (MiCA). This exemption allows non-EU crypto asset service providers to serve customers who approach them entirely on their own initiative.

However, ESMA's guidelines stress that companies cannot use this exemption to circumvent MiCA requirements. Binance withdrew its Greek MiCA application in June and said it would seek authorization in another EU member state. The company told Cointelegraph that it continues pursuing MiCA authorization and remains committed to operating in Europe on a long-term compliant basis.

ESMA is also pushing 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, ESMA said its proposals would support faster, more consistent supervisory action across the EU and reduce opportunities for companies to exploit regulatory differences.