Binance's use of MiCA exemption draws EU regulator scrutiny, FT reports
In brief
- ESMA and French, German and Greek regulators are examining Binance's reverse solicitation use, FT reports.
- Binance says it complies with applicable rules and is still pursuing MiCA authorization.
- ESMA separately asked for stronger powers over unauthorized non-EU firms soliciting Europeans.
- ESMA's non-compliant provider register grew to 173 entries; Binance isn't listed.
What the FT reported
Citing one person familiar with the matter, the FT said Binance is relying on reverse solicitation to keep serving some EU customers. Some EU traders are being served through Binance's Abu Dhabi-regulated entity, according to the same report.
The exemption is narrow. It lets non-EU crypto asset service providers (CASPs) serve customers who approach them entirely on their own initiative, and ESMA's guidelines state that firms can't use it to circumvent MiCA requirements.
Binance's response
Binance withdrew its Greek MiCA application in June and said it would seek authorization in another EU member state. On Sept. 18, it told Cointelegraph it's still pursuing MiCA authorization and remains committed to operating in Europe on a long-term compliant basis. Before MiCA's transitional period ended on July 1, the exchange had said EU access would depend partly on a user's jurisdiction, account status and servicing entity.
Binance did not confirm whether it was in talks with EU regulators, telling Cointelegraph that it “complies with applicable regulatory requirements.”
Germany's BaFin declined to provide further information (citing legal confidentiality obligations). ESMA and the French and Greek regulators hadn't responded by the time Cointelegraph published.
ESMA asks for more power
ESMA's next move is a separate one, and it's on the record. In its response to the European Commission's consultation on reviewing MiCA, ESMA on Wednesday called for stronger powers over non-EU companies that solicit European investors without MiCA authorization. That isn't confirmation of a Binance probe. ESMA said its proposals would support faster, more consistent supervisory action across the EU and reduce opportunities for companies to exploit regulatory differences.
ESMA Chair Verena Ross said on Monday that the regulator's MiCA focus had shifted from rulemaking toward supervision and convergence.
ESMA's register of non-compliant crypto providers grew from 164 entries on July 16 to 173 in its Sept. 30 update. ESMA updates the list based on information from national authorities and other sources.
Binance doesn't appear on it, and MiCA describes the register as non-exhaustive.
Frequently asked questions
What is MiCA's reverse solicitation exemption?
It allows non-EU crypto asset service providers to serve customers who approach them entirely on their own initiative. ESMA's guidelines state that companies can't use the exemption to circumvent MiCA requirements.
Does Binance have MiCA authorization?
No. Binance withdrew its Greek MiCA application in June and said it would seek authorization in another EU member state. On Sept. 18 it told Cointelegraph it's still pursuing MiCA authorization and remains committed to operating in Europe on a long-term compliant basis.
What powers is ESMA asking for?
In its response to the European Commission's MiCA review consultation, ESMA called for stronger powers over non-EU companies that solicit European investors without MiCA authorization. It said the proposals would support faster, more consistent supervision across the EU.
