ESMA Says EU Users Must Be Served Only Through MiCA-Authorized Entities

The European Securities and Markets Authority said EU users must be served only through entities authorized under the Markets in Crypto-Assets regulation, or MiCA, a day before the bloc’s transition period ends. The statement has intensified debate over whether Binance’s practice of routing some EU users to an Abu Dhabi entity meets that standard.

Cointelegraph reported on June 30 that an ESMA spokesperson said MiCA protections apply only to entities licensed within the EU. The comments came ahead of the July 1 deadline for the EU’s MiCA transition period.

Binance recently notified users in some EU countries, including Poland, France, Spain and Italy, of service changes related to the MiCA transition. Users in countries where the exchange lacks a locally registered entity were told that no separate action is required for now.

But screenshots of Binance customer-support messages circulating on social media indicate that some EU users may be able to receive services through the exchange’s Abu Dhabi Global Market, or ADGM, entity. Yuriy Brisov, a lawyer at Digital & Analogue Partners, said an Abu Dhabi license has no effect under the MiCA framework. An ADGM entity is simply a third-country firm from MiCA’s perspective, no different from one based in the US or Singapore, he added.

ESMA said a crypto-asset service provider, or CASP, based outside the EU may serve EU users without MiCA authorization only under the reverse solicitation exception in Article 61 of MiCA. That exemption applies only when a user independently requests the service without any marketing or solicitation. ESMA considers websites, mobile apps, social media, online advertising, sponsorships and influencer campaigns targeting EU users to be solicitation.

Brisov said the reverse-solicitation exception is intended for individual cases in which EU users approach a provider on their own, not as a way to preserve an existing customer base built through years of marketing. Binance did not respond to repeated requests for comment from Cointelegraph.