Binance Faces EU Scrutiny Over Reverse Solicitation Exemption

Regulators in the European Union are scrutinizing Binance's use of the reverse solicitation exemption, an exception that allows non-EU companies to serve EU customers when they initiate the relationship. The Financial Times reported Thursday that the European Securities and Markets Authority (ESMA) and national regulators in France, Germany, and Greece are questioning Binance over its continued service to customers in the bloc.

According to the FT, ESMA views reverse solicitation as an exception that should be treated very narrowly, not used to circumvent EU regulations. Regulators have requested information from Binance, and if they're not satisfied with the exchange's response, they could take enforcement action, including fines.

Binance failed to secure a license under the EU's Markets in Crypto Assets (MiCA) regime this summer. Under MiCA, unlicensed firms were expected to wind down their EU businesses from July 1 and stop serving customers except to help them transfer or sell their holdings.

The scrutiny adds to Binance's long list of regulatory troubles, including a record $4.3 billion fine in the US in 2023 for money laundering and sanctions violations.