Binance Faces EU Scrutiny Over MiCA Licence Application

Binance, the world's largest cryptocurrency exchange, is facing scrutiny from EU regulators over its use of a legal exemption to continue serving customers in the region. The Financial Times reported that European officials are questioning Binance about its application under a new licence regime, which was rejected earlier this year.

Under new EU rules, called Markets in Crypto-Assets (MiCA), crypto companies were required to obtain a licence by the end of June to continue operating across the bloc. Without a licence, Binance would not qualify to continue operating in the EU from July.

The European Securities and Markets Authority (ESMA) is looking into Binance's use of 'reverse solicitation', a legal exemption allowing companies based outside the EU to provide financial services to customers in the bloc if those users seek the relationship entirely on their own initiative. The ESMA told the FT that the reverse solicitation exemption should be understood as very narrowly framed and not used to circumvent MiCA requirements.

The regulators have requested information from Binance and could take enforcement action, including imposing fines, if they are not satisfied with the company's response.