EU regulators reportedly scrutinize Binance’s use of MiCA exemption

European regulators are reportedly scrutinizing Binance’s use of reverse solicitation to serve EU customers without authorization under the Markets in Crypto-Assets Regulation (MiCA). The Financial Times reported on Thursday that the European Securities and Markets Authority (ESMA) and regulators in France, Germany and Greece are examining Binance’s use of the exemption. Binance is relying on reverse solicitation to serve some EU customers, according to a person familiar with the matter cited by the Financial Times. The exemption allows non-EU crypto asset service providers to serve customers who approach them entirely on their own initiative. However, ESMA’s guidelines say companies cannot use the exemption to circumvent MiCA requirements. Binance withdrew its Greek MiCA application in June and said it would seek authorization in another EU member state. Binance said on Sept. 18 that it continued to pursue MiCA authorization and remained committed to operating in Europe on a compliant basis over the long term. Ahead of the July 1 end of MiCA’s transitional period, Binance said EU access would depend partly on a user’s jurisdiction, account status and servicing entity. Some EU traders are now being served through Binance’s Abu Dhabi-regulated entity, according to the Financial Times. Binance did not confirm whether it was in talks with EU regulators and said it complies with applicable regulatory requirements. ESMA on Wednesday called for stronger powers over non-EU companies that solicit European investors without MiCA authorization. ESMA made the call in its response to a European Commission consultation on reviewing MiCA. ESMA said its proposals would support faster, more consistent supervision across the EU and reduce opportunities to exploit regulatory differences. ESMA Chair Verena Ross said Monday that the regulator’s MiCA focus had shifted from rulemaking toward supervision and convergence. ESMA’s register of non-compliant crypto providers grew from 164 entries on July 16 to 173 in its Sept. 30 update. Binance does not appear on the latest register. MiCA describes the register as non-exhaustive, and ESMA updates it using information from national authorities and other sources. Germany’s Federal Financial Supervisory Authority declined to provide further information, citing legal confidentiality obligations. ESMA and the French and Greek regulators had not responded by publication.