European regulators are examining Binance's reliance on reverse solicitation, a legal exemption under the Markets in Crypto-Assets Regulation (MiCA), to continue serving customers in the European Union without full authorization.
The European Securities and Markets Authority (ESMA) and regulators in France, Germany, and Greece are investigating Binance's use of this exemption, according to reporting on Thursday. Reverse solicitation permits non-EU crypto asset service providers to serve customers who approach them on their own initiative, though ESMA guidelines specify that companies cannot use the exemption to circumvent MiCA requirements.
Binance withdrew its Greek MiCA application in June and indicated it would pursue authorization in another EU member state. The exchange told Cointelegraph in September that it continues seeking MiCA authorization and remains committed to compliant long-term operations in Europe. Some EU traders are now being served through Binance's Abu Dhabi-regulated entity.
EU access for traders has become dependent on jurisdiction, account status, and servicing entity following MiCA's transitional period end on July 1.
ESMA Seeks Stronger Enforcement Powers
ESMA on Wednesday called for stronger supervisory powers over non-EU companies that solicit European investors without MiCA authorization. In its response to the European Commission's consultation on MiCA review, the authority said such powers would enable faster and more consistent supervisory action across the EU and reduce opportunities for regulatory arbitrage.
ESMA Chair Verena Ross said Monday that the regulator's MiCA focus has shifted from rulemaking toward supervision and convergence.
Compliance Status
Binance does not appear on ESMA's register of non-compliant crypto providers, which grew from 164 entries on July 16 to 173 as of September 30. ESMA describes the register as non-exhaustive and updates it based on information from national authorities and other sources.
Binance did not confirm whether it was in talks with EU regulators, stating only that it complies with applicable regulatory requirements. Germany's Federal Financial Supervisory Authority declined to provide further information, citing legal confidentiality obligations.
