ESMA warns Binance EU clients must use MiCA-licensed entity
In brief
- ESMA mandates EU crypto clients served through MiCA-authorized legal entities, not offshore alternatives
- Binance adjusted services in Poland, France, Spain, and Italy after July 1 MiCA transitional deadline
- Reverse solicitation exemption does not apply if non-EU companies solicit or market to EU clients
- Screenshots showed some Binance EU users could access Abu Dhabi Global Market entity services
- Legal experts say Abu Dhabi license has no effect under MiCA, treating jurisdiction as third-country
ESMA's Licensing Requirement
ESMA stated that EU crypto clients must be serviced through a MiCA-authorized entity. The regulatory body emphasized that crypto asset service providers must hold MiCA authorization to serve clients across the EU and European Economic Area, and that MiCA protections apply only to the legal entity that is licensed in the EU.
This means offshore entities—even those licensed in other jurisdictions—cannot legally serve EU customers under MiCA's framework unless they qualify for a narrow exemption.
The Reverse Solicitation Exemption
Non-EU crypto companies can serve EU clients without a MiCA license only under the narrow exemption of reverse solicitation provided by Article 61 of MiCA. However, the exemption has strict limits. Article 61 allows a non-EU crypto company to serve an EU client without a MiCA license only when the client initiates the relationship entirely on their own without solicitation, marketing or promotion by the company.
The reverse solicitation exemption does not apply if a third-country company solicits clients in the EU. ESMA's solicitation guidelines include activities such as operating websites, mobile apps, social media, online advertising, sponsorships and influencer campaigns targeting EU users.
Binance's Unclear Path Forward
Binance adjusted services in certain EU countries including Poland, France, Spain and Italy as part of its MiCA transition. Yet screenshots of customer support messages surfaced online that muddied the picture. Screenshots of Binance customer support messages circulating on social media suggested that some EU users could be serviced through Binance's Abu Dhabi Global Market entity.
If true, this would conflict with MiCA's requirements. Yuriy Brisov, a lawyer at Digital & Analogue Partners, stated that an Abu Dhabi license has no effect under MiCA because the jurisdiction is treated as a third country. Brisov added that the reverse solicitation exemption was designed for isolated cases where an EU customer independently approaches a non-EU company, not for maintaining an existing customer base built through years of marketing.
The silence leaves open questions about how the exchange plans to comply with the new regulatory landscape.
Frequently asked questions
What is MiCA and when did it take effect?
MiCA (Markets in Crypto-Assets Regulation) is the EU's regulatory framework for crypto service providers. The transitional deadline was July 1, requiring crypto asset service providers to hold MiCA authorization to serve clients across the EU and European Economic Area.
Can non-EU crypto companies serve EU customers?
Non-EU crypto companies can serve EU clients only under the narrow reverse solicitation exemption in Article 61 of MiCA. This exemption applies only when an EU client initiates the relationship entirely on their own without any solicitation, marketing, or promotion by the company.
Why doesn't Binance's Abu Dhabi license help it serve EU users?
Under MiCA, Abu Dhabi is treated as a third country. An Abu Dhabi license has no effect under MiCA's framework, meaning Binance would still be classified as a non-EU company serving EU clients, which requires either MiCA authorization or the narrow reverse solicitation exemption.
