EU Probes Binance over Reverse Solicitation Licensing Exception

The European Union (EU) is questioning how Binance continues to serve its crypto users. The scrutiny centers around Binance's use of 'reverse solicitation,' a narrow licensing exception that allows providers to operate in the EU without full authorization.

Under Article 61 of the Markets in Crypto-Assets (MiCA) regulation, an EU customer can approach a firm outside the bloc independently and request a crypto service. This specific service can qualify for an exception to authorisation.

The distinction between 'reverse solicitation' and 'targeted advertising' is crucial. If a customer completes registration after following targeted advertisements from an exchange, it may not be considered a genuine approach. Conversely, if the customer initiated contact independently, the original request can accommodate more than one-off trades with no fixed expiry date.

Regulators are also examining whether Binance's continued service is justified based on its application for MiCA authorization. The EU's Financial Times reported that regulators were questioning Binance's use of reverse solicitation. Binance has stated it complies with applicable requirements and is actively working towards becoming MiCA-authorised.