EU regulators question Binance over MiCA reverse solicitation exemption

What happened

EU regulators are reportedly asking Binance to explain how it keeps serving some European customers after the exchange failed to win a MiCA license. The Financial Times, citing people familiar with the matter, reported that the European Securities and Markets Authority and regulators in France, Germany and Greece are checking whether Binance qualifies for MiCA's "reverse solicitation" exemption.

Regulators want details of the legal basis for its continued services in the bloc. If they reject its reading of the rule, enforcement action is possible, and the exchange could face financial penalties.

Rules required unlicensed firms to take immediate steps to wind down from July 1 and stop serving customers, except to help them transfer or sell holdings. Binance lost the ability to serve European customers after it failed to get licensed through Greece during the MiCA transition period that ended on July 1. Even so, some European users can still trade on the exchange. Binance said it complies with requirements in the jurisdictions where it operates and reiterated that it keeps working on becoming MiCA-authorized.

Why it matters

The case could test the limits of a framework meant to make crypto regulation less fragmented across the bloc. If offshore exchanges can reach EU customers through the exemption, that structure could weaken.

A day before the FT report, ESMA said European regulators should get more powers to enforce MiCA. It wants authority to order crypto companies to freeze assets when there are reasonable grounds to suspect links to crime, arguing that current procedures are so slow that suspicious assets have often disappeared by the time a freeze is requested.

Under the proposals, national regulators could also remove websites tied to scams or unauthorized crypto firms and act against non-EU companies that solicit EU investors without authorization. ESMA also proposed a ban on certain misleading marketing techniques, new rules for third-party marketing and full cost information for customers.

Background

In June, Binance said it had worked with regulators for about 18 months and had received no formal sign of rejection. It later withdrew an application in Greece and said it would pursue authorization in another member state.

By early June, the application had cleared its technical review, and the mandatory 40-day assessment period had ended without objections. The Wall Street Journal alleged that European Central Bank President Christine Lagarde personally asked Greek Prime Minister Kyriakos Mitsotakis to block the application after Greek regulators had all but approved it.

Binance secured full authorization from the Financial Services Regulatory Authority of Abu Dhabi Global Market in December 2025. Some customers claim the exchange was operating via an Abu Dhabi-based business.

What is still unclear

• It is not yet clear whether regulators will accept Binance's use of the reverse solicitation exemption, or reject its interpretation and open enforcement action.
• ESMA's proposed powers form part of its response to a consultation on MiCA, which is under review, so their fate is open.
• A group of European central banks published its own response last week, and some regulators have voiced concern about divergence and patchy enforcement of the rules.

Questions readers ask