EU regulators question Binance's use of exemption after licence setback

EU officials are questioning Binance about its use of a legal exemption to continue serving customers in the bloc, according to people familiar with the matter. Binance failed to obtain a licence this summer under the EU's new crypto rules. Under those rules, unlicensed crypto companies should have taken immediate steps to wind down their EU businesses from July 1. The companies should have stopped serving customers except to help them transfer or sell their crypto holdings. The European Securities and Markets Authority (ESMA) and national regulators, including those in France, Germany and Greece, are examining Binance's use of "reverse solicitation", the people said. Some regulators have requested information from Binance. Reverse solicitation allows a company based outside the EU to serve a customer in the bloc if the customer initiates the relationship entirely independently. EU law permits crypto companies to use the exemption only narrowly and imposes strict restrictions even when its use is allowed. The exemption gained prominence after Brexit, when UK-based companies sought to continue serving EU clients without a separate EU licence. The people said regulators could take enforcement action, including fines, if they are not satisfied with Binance's response. One person said regulators are also examining other, smaller companies. ESMA said the exemption should not be used to circumvent requirements under the Markets in Crypto-Assets regime. The Dutch market watchdog, the Autoriteit Financiële Markten (AFM), said crypto service providers cannot simply claim reverse solicitation and must meet clear requirements and guidelines. The AFM said action against illegal crypto services matters for consumer protection and fair competition. Financial market regulators in Germany, France and Greece declined to comment. ESMA and the AFM declined to comment specifically on Binance. Binance said it complies with applicable regulatory requirements where it operates and continues to review its products and services against those requirements. Binance said it is working toward authorisation under the Markets in Crypto-Assets regime. Binance previously held local licences in several European countries, including France, Spain and Poland, but those licences have lapsed under the new regime. A user living in Austria and two people familiar with the matter said customers outside those countries receive services from Binance's Abu Dhabi-regulated entity. Binance became regulated in Abu Dhabi in December 2025. The Austrian user said the app still lets them buy, sell and trade various products as before. One person said Binance operates under reverse solicitation in EU countries where it lacked local licences. The person said customers there seek to join without being marketed to, and Binance does not want to expand its business this way long term. Another person said multiple regulators are asking Binance to explain its basis for claiming reverse solicitation. In 2023, Binance was fined a record $4.3 billion in the US and pleaded guilty to criminal charges related to money laundering and breaches of international financial sanctions.