EU officials are questioning Binance over its use of a legal exemption to keep serving customers in the bloc despite being required to wind down its business there, the Financial Times reported on October 1.
The exemption at issue is reverse solicitation under Article 61 of the Markets in Crypto-Assets Regulation (MiCA), which allows firms outside the EU to serve European clients only when the client approaches the firm on its own initiative. According to the FT report, the European Securities and Markets Authority and national regulators are examining whether Binance's model meets that test, some regulators have requested information from the exchange, and some trading involving EU customers has been routed through a Binance entity in Abu Dhabi. Regulators could pursue enforcement measures, including fines, if they reject Binance's interpretation. Binance said in a statement cited in coverage of the report that it is actively working towards MiCA authorisation and complies with applicable rules where it operates.
Binance has had no MiCA licence since the regulation's transitional period ended on July 1. The exchange withdrew its application with Greece's Hellenic Capital Market Commission on June 24, a week before the deadline, and suspended new spot orders, deposits, sign-ups and Earn products for users in France, Italy, Spain, Poland and other member states while keeping withdrawals open. Binance has said it is pursuing authorisation through another member state but has not named it.
The wind-down obligation comes from ESMA. In a June 23 statement , the authority said unauthorised providers must "immediately stop onboarding new EU clients, refrain from opening new client relationships or accounts, and cease marketing activities," and limit services to selling or transferring crypto-assets and closing positions. The same statement said non-EU firms may serve EU clients only "where services are strictly provided at the client's own exclusive initiative." ESMA's reverse solicitation guidelines describe the exemption as "very narrowly framed" and treat websites, apps, social media and influencer campaigns aimed at EU users as solicitation.
The Greek application had already drawn political attention. The Wall Street Journal reported in September that ECB President Christine Lagarde pressed Greek Prime Minister Kyriakos Mitsotakis to reject it, a claim none of the parties has confirmed.
How regulators rule on Binance will set a precedent for every offshore exchange that missed the MiCA deadline. If reverse solicitation can support an exchange of Binance's size routing EU business through an Abu Dhabi entity, the licensing regime loses much of its force. ESMA's own guidance suggests it does not intend to let that happen.
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