Binance's EU Business Under Regulatory Fire for MiCA Exemption Use
European regulators are scrutinizing Binance's use of a MiCA exemption to continue serving some EU customers after entering July without authorization to operate across the bloc. The exemption, known as reverse solicitation, allows an overseas company to serve EU customers when those users approach the company entirely on their own initiative. However, ESMA has said that this exemption is narrowly framed and should not be used to circumvent MiCA requirements.
Regulators have requested information from Binance and could impose fines if they are not satisfied with the exchange's response. Binance has stated that it is working toward MiCA authorization and complies with applicable regulatory requirements where it operates. The exchange's MiCA exemption is facing a regulatory test, with some trading involving EU customers being routed through a Binance entity in Abu Dhabi, while customers who independently approached the platform could be onboarded under Binance's interpretation of the exemption.
ESMA is putting more attention on reverse solicitation as it prepares for a more enforcement-focused phase of MiCA supervision. The regulator identified reverse solicitation among the areas it intends to examine as part of its MiCA supervision priorities for 2027, alongside outsourcing, operational resilience, liquidity, and whether crypto companies maintain sufficient operations inside the EU.
Binance originally pursued its EU-wide authorization through Greece, where an approval would have allowed it to provide covered services across the bloc through MiCA's passporting system. However, the licensing process ran into trouble in June, and Binance eventually withdrew the application before the transition period expired. The exchange has stated that it intends to pursue authorization through another EU jurisdiction and remains committed to securing authorization elsewhere in the bloc.