Binance Faces EU Scrutiny Over Reverse Solicitation Exemption

Binance, the world's largest cryptocurrency exchange, is under scrutiny from EU regulators over its use of the 'reverse solicitation' exemption to continue serving European customers without a MiCA license.

The exchange had withdrawn its application for a MiCA license in Greece and was seeking authorization in another EU member state, but it has not publicly identified that jurisdiction.

Regulators are questioning Binance's use of reverse solicitation, which allows non-EU firms to serve customers who approach them entirely on their own initiative. The European Securities and Markets Authority (ESMA) says this exemption must be interpreted very narrowly and cannot be used to circumvent MiCA licensing requirements.

Binance is relying on Article 61 of MiCA, which provides a limited route for companies based outside the EU to serve customers in the bloc without obtaining authorization. However, ESMA's existing guidance points toward a restrictive interpretation, warning against allowing third-country companies to use this provision as a loophole for effectively conducting business in Europe without authorization.