Binance faces fresh EU scrutiny over MiCA compliance

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European regulators examine Binance operations

Highlights

Binance still lacks EU-wide MiCA authorization.
Regulators are examining its use of reverse solicitation.
ESMA wants more consistent enforcement across the EU.

Binance withdrew its Greek MiCA application in June and has yet to appear among authorized providers on the EU register. Cointelegraph reported that the European Securities and Markets Authority, along with regulators in France, Germany, and Greece, is examining the exchanges' use of reverse solicitation. Binance says it complies with applicable requirements and continues to pursue MiCA authorization in Europe.

Regulators examine reverse solicitation

MiCA allows a non-EU crypto provider to offer services when an EU customer initiates the relationship without being solicited. ESMA has stressed that the exception is narrow and cannot be used as a general route around authorization requirements.

The issue has become more important since the EU transitional period ended on July 1. Crypto companies without authorization were expected to take immediate steps to wind down regulated activities rather than continue normal customer acquisition. Binance had previously told customers that access after the deadline would depend on factors including jurisdiction, account status, and the entity providing the service.

Some European traders are now being served through a Binance entity regulated in Abu Dhabi, according to reporting cited. Regulators are examining whether the exchange's arrangements remain within the limits of the exemption.

MiCA moves from licensing to enforcement

The Binance case comes as European authorities shift their attention from writing and implementing MiCA rules toward supervising how companies follow them. ESMA has identified reverse solicitation among the areas receiving increased attention and is seeking stronger powers over non-EU companies that target European investors without authorization.

The regulated market has continued expanding in the meantime. ESMA's register contained 359 authorized crypto providers after its latest additions in late September. Its separate list of non-compliant providers increased from 164 entries in mid-July to 173 by Sept. 30, although Binance was not included on that list. The register is not exhaustive.

The exemption could define Europe's enforcement line

The dispute is significant because reverse solicitation determines how much business an offshore platform can conduct with European customers without obtaining a MiCA license. A broad interpretation could give unlicensed providers substantial access to the market, while a narrow interpretation would leave considerably less room for continued services.

How regulators handle Binance will therefore provide an early indication of how aggressively Europe intends to enforce the boundary between authorized crypto businesses and offshore platforms. For customers and exchanges, that boundary will determine which services can continue while companies pursue authorization.

We also reported Binance opens options trading on more than 1,000 U.S. stocks and ETFs.

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