Binance Faces EU Scrutiny Over Reverse Solicitation Exemption

European regulators are scrutinizing Binance's use of a legal exemption to continue serving customers in the European Union without authorization under the bloc's crypto rules.

The European Securities and Markets Authority (ESMA) and regulators in France, Germany, and Greece are examining Binance's use of reverse solicitation under the Markets in Crypto-Assets Regulation (MiCA), according to a report by the Financial Times on Thursday.

Binance withdrew its Greek MiCA application in June and said it would seek authorization in another EU member state. However, the company is relying on reverse solicitation to continue serving some EU customers, which allows non-EU crypto asset service providers (CASPs) to serve customers who approach them entirely on their own initiative.

ESMA's guidelines stress that companies cannot use this exemption to circumvent MiCA requirements. Binance did not confirm whether it was in talks with EU regulators, stating only that it 'complies with applicable regulatory requirements.'