Binance Faces EU Regulatory Probe Over Use of MiCA Exemption

Binance, the world’s largest cryptocurrency exchange, is facing a regulatory probe over its use of an exemption under the European Union’s Markets in Crypto-Assets regulation, or MiCA, to serve some European clients.

Ublockchain reported on October 1, citing the Financial Times, that the European Securities and Markets Authority, along with regulators in France, Germany and Greece, is reviewing whether Binance can rely on MiCA’s “reverse solicitation” exemption.

Reverse solicitation is an exemption that allows crypto firms to provide services to EU clients without MiCA authorization under certain conditions, as long as the firm did not first market or solicit the services and the customer independently requested them.

Binance has continued providing services to some European clients based on that provision despite not having secured MiCA authorization, according to the report.

Regulators are examining whether Binance’s service model actually meets the requirements for reverse solicitation. If authorities reject Binance’s interpretation of the exemption, the matter could lead to enforcement action.