Binance’s Use of Legal Exemption to Serve EU Customers Without MiCA License Faces EU Probe

EU regulators are investigating Binance over its use of the “reverse solicitation” exemption under the Markets in Crypto-Assets (MiCA) regulation to continue serving customers without a license. The exchange failed to secure MiCA licenses before the transition period and now faces scrutiny.

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Binance Under EU Inquiry for Serving Without MiCA License

The world’s largest cryptocurrency exchange faces investigation by the European Securities and Markets Authority (ESMA) and regulators in France, Germany, and Greece. Binance is using a legal exemption to continue serving customers in the bloc after failing to secure a MiCA license, Financial Times reported on October 1.

ESMA said Binance continued allowing new account openings in some European markets even after withdrawing its application through Greece in June. Regulators have requested information from the crypto exchange over its use of reverse solicitation exemption and warned that failure could trigger enforcement actions including fines.

The reverse solicitation exemption under Article 61 of MiCA allows overseas operators to provide services without a license only when EU customers request services, but without any prior advertising or promotional activity by firms.

“The reverse solicitation exemption must be interpreted very narrowly. It should be considered an exception and must not be used to circumvent MiCA requirements,” as per ESMA.

The investigation comes as ESMA prepares to transition to the enforcement phase of MiCA supervision. Supervisors have included reverse solicitation in their 2027 supervisory priorities, alongside outsourcing, operational resilience, liquidity, and whether firms maintain sufficient operational infrastructure within the EU.

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Exchange Missed License After High-Level Political Intervention

Binance initially pursued a license through Greece but withdrew its application in June after high-level political intervention and central bank opposition. The crypto exchange shifted focus to operating via the UAE, as CoinGape reported earlier.

Binance earlier said it “complies with applicable regulatory requirements in the jurisdictions in which it operates” and that its “products and services continue to be reviewed and aligned with relevant regulatory obligations”.

“We are actively working toward becoming MiCA-authorised and view this as an important step in providing users with a consistent, regulated, and trusted service across the European market,” it added.

Binance stopped offering crypto trading services in France after failing to obtain a MiCA license. French users were only allowed to withdraw their crypto assets.

But months after it was set to leave the EU, the crypto exchange is still doing business there. That’s due to a combination of side doors and workarounds that have allowed Binance to express confidence about continuing to operate in the 27-member-state bloc, according to people familiar with the matter.

This regulatory action by EU authorities is expected to serve as the first major test of how MiCA’s exemption provisions are applied in practice. If the scope of the reverse solicitation provision is narrowed, it could have broad implications for other overseas crypto businesses seeking to access the European market without MiCA authorization.

As CoinGape reported recently, Binance is under a fresh US DOJ investigation over possible Iran sanctions violations. The probe is led by the Attorney’s Office for SDNY, with the US DOJ’s Criminal Division.

For crypto investors searching for MiCA-compliant firms, here are the best regulated crypto exchanges in Europe.