Binance Faces EU Scrutiny Over Reverse Solicitation Exemption

Binance, the world's largest cryptocurrency exchange, is facing questions from EU officials over its continued operations in the region despite an order to wind down its business. The company lost permission to offer services to European Union clients after its application under a new licence regime was rejected earlier this year, threatening access for millions of users.

Under the new EU rules, called Markets in Crypto-Assets (MiCA), crypto companies were required to obtain a license 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) and national regulators are 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.

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