Binance Faces EU Scrutiny Over MiCA Exemption Use
Binance's business in Europe is under scrutiny as EU regulators question its use of a legal exemption to continue serving customers in the bloc despite being required to wind down its operations. The Financial Times reported on October 1 that European Securities and Markets Authority (ESMA) and national regulators are examining whether Binance's model meets the test for reverse solicitation under Article 61 of the Markets in Crypto-Assets Regulation (MiCA). This exemption allows firms outside the EU to serve European clients only when the client approaches the firm on its own initiative.
According to the FT report, some regulators have requested information from Binance and trading involving EU customers has been routed through a Binance entity in Abu Dhabi. Regulators could pursue enforcement measures, including fines, if they reject Binance's interpretation of the exemption. Binance said it is actively working towards MiCA authorisation and complies with applicable rules where it operates.
The exchange withdrew its application for an MiCA licence with Greece's Hellenic Capital Market Commission on June 24, a week before the deadline, and suspended new spot orders, deposits, sign-ups and Earn products for users in France, Italy, Spain, Poland and other member states while keeping withdrawals open. Binance has said it is pursuing authorisation through another member state but has not named it.