Binance is facing scrutiny from European regulators over its continued provision of cryptocurrency services in parts of the European Union after failing to secure a licence under the bloc’s Markets in Crypto-Assets Regulation (MiCA), according to the Financial Times.
The review centres on Binance’s reliance on the reverse solicitation exemption, which allows customers in the EU to approach crypto companies based outside the bloc on their own initiative. Regulators in France, Germany and Greece, alongside the European Securities and Markets Authority, are examining whether Binance’s use of the exemption meets MiCA requirements after the July 1 deadline for unlicensed firms to wind down their EU operations.
Regulators Examine Exemption
Under MiCA, reverse solicitation allows an EU customer to independently seek services from a crypto company based outside the bloc, but regulators have warned that companies cannot use the provision as a broad alternative to obtaining authorization. Authorities are now examining whether Binance’s customer relationships satisfy those conditions, with some regulators having requested information from the exchange, according to the Financial Times.
Binance maintains that it complies with applicable regulatory requirements in the jurisdictions where it operates and reviews its products and services against relevant obligations, while the exchange has also said it is working toward obtaining MiCA authorization. The Financial Times reported that regulators are examining other crypto companies as part of the wider enforcement of the new EU framework.
The crypto exchange had already begun adjusting its European operations ahead of the licensing deadline, with the exchange restricting services and stopping new registrations in several EU markets, including France, Italy, Poland and Spain, after failing to secure the required authorization.
Investor Takeaway
EU regulators are examining whether Binance’s reliance on reverse solicitation allows it to continue serving customers without a MiCA licence, particularly in countries where it lacks local authorization.
Binance Pursues EU Authorization
The exchange had sought Greece as a potential route to MiCA authorization after filing an application for a licence with Greek regulators, which could have provided a regulatory basis for offering services across the bloc through MiCA’s passporting system.
The company later withdrew the Greek application shortly before the July 1 deadline, leaving the exchange without a MiCA licence as the transition period for firms operating under previous national arrangements came to an end. The withdrawal followed regulatory difficulties surrounding Binance’s European licensing plans.
Customers in EU countries where Binance does not hold local licences are receiving services through its Abu Dhabi-regulated entity, according to people familiar with the matter cited by the Financial Times. The report also said Binance continues to see customers in some EU countries seek to onboard independently without being marketed to.
Regulators are now examining how Binance determines whether those customers initiated their relationships with the exchange on their own initiative, an issue that could determine whether its reliance on reverse solicitation complies with EU rules. Binance has already faced restrictions across European markets after missing the MiCA licensing deadline.
Investor Takeaway
Binance withdrew its Greek MiCA application before the July 1 deadline and has since faced service restrictions across several EU markets while continuing to pursue regulatory approval.
Other Articles
Nike Stock Falls to $32 After a $11.2 Billion Quarter, a…
Steelers trade Joey Porter Jr. to the Cowboys
