The European Securities and Markets Authority (ESMA) and regulators in France, Germany, and Greece are investigating Binance over its use of a legal exemption to continue serving EU customers without a Markets in Crypto-Assets (MiCA) license. According to reporting on October 1, Binance failed to secure MiCA licensing before the transition period ended.
ESMA stated that 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 exchange regarding its use of the reverse solicitation exemption and warned that non-compliance could result in enforcement actions including fines.
The Reverse Solicitation Exemption
Article 61 of MiCA permits overseas operators to provide services without a license only when EU customers independently request services, provided the firms engage in no prior advertising or promotional activity. ESMA emphasized that this exemption "must be interpreted very narrowly" and "should be considered an exception and must not be used to circumvent MiCA requirements."
The reverse solicitation provision is expected to be a focal point of MiCA enforcement, with ESMA including it in its 2027 supervisory priorities alongside outsourcing, operational resilience, and liquidity management.
Binance's License Application and Strategic Shift
Binance initially pursued a MiCA license through Greece but withdrew its application in June following high-level political intervention and central bank opposition. The exchange subsequently shifted its operational focus to the United Arab Emirates.
Binance stated that it "complies with applicable regulatory requirements in the jurisdictions in which it operates" and that it is "actively working toward becoming MiCA-authorised." The company halted crypto trading services in France after failing to obtain MiCA licensing, restricting French users to asset withdrawals only.
Implications for Crypto Operators
This regulatory action represents a significant test of how MiCA's exemption provisions will be applied in practice. If EU authorities narrow the scope of the reverse solicitation provision, the decision could have broad implications for other overseas crypto businesses seeking to access the European market without MiCA authorization.
