Binance Under Fire from European Regulators Over Reverse Solicitation Exemption

European regulators are scrutinizing Binance's operation in the EU after it failed to secure a license under the Markets in Crypto Assets (MiCA) regime. The Financial Times reported that the European Securities and Markets Authority (ESMA) and national watchdogs, including those in France, Germany, and Greece, are examining how the exchange relies on 'reverse solicitation', an exemption under Article 61 of MiCA.

The exemption allows a firm outside the bloc to provide services at the client's initiative. However, regulators have expressed concerns that Binance is using this loophole to continue serving customers in the EU despite not having a license. The ESMA guidelines state that the exemption should be construed narrowly and cannot be used to circumvent MiCA requirements.

Binance had registrations in six member states, France, Italy, Lithuania, Poland, Spain, and Sweden, but these have lapsed under MiCA. The exchange has said it is 'actively working toward becoming MiCA-authorised' and that it complies with applicable regulatory requirements.