EU regulators question Binance's use of reverse solicitation exemption after MiCA license failure

European regulators, including ESMA and watchdogs in France, Germany, and Greece, are investigating Binance's continued service to EU customers. After failing to secure a MiCA license by the July 1, 2026 deadline, Binance was ordered to wind down its EU operations. Regulators are now questioning whether Binance is abusing the 'reverse solicitation' exemption to bypass rules, routing users through its Abu Dhabi entity. Binance faces potential fines but maintains it complies with all regulations and is actively pursuing MiCA authorization.

Regulatory inquiry into Binance's operations

• ▪The European Securities and Markets Authority (ESMA) and national regulators in France, Germany, and Greece are conducting the inquiry into Binance's operations.
• ▪European regulators are examining Binance's reliance on the 'reverse solicitation' exemption to continue serving European Union customers without a MiCA license.
• ▪National regulators have requested information from Binance and could impose fines or take other enforcement actions if they are dissatisfied with the exchange's response.

Rules and warnings on reverse solicitation

• ▪The Dutch market watchdog, Autoriteit Financiële Markten (AFM), warned that crypto asset service providers cannot simply claim reverse solicitation and must meet clear guidelines.
• ▪The reverse solicitation exemption under Article 61 of MiCA allows non-EU firms to serve EU clients only if the client initiates the relationship on their own exclusive initiative.
• ▪ESMA stated that the reverse solicitation exemption is narrowly framed, must be regarded as an exception, and cannot be used to circumvent MiCA requirements.

Binance's routing of EU users to Abu Dhabi

• ▪An Austrian Binance user reported that they could still buy, sell, and trade various products as usual on the app through the Abu Dhabi-regulated entity.
• ▪Binance routes some European Union traders through its Abu Dhabi-regulated entity, where the exchange has been regulated since December 2025.

ESMA's push for stronger enforcement powers

• ▪ESMA has called for stronger enforcement powers over non-EU companies that solicit European investors without MiCA authorization.
• ▪On September 30, 2026, ESMA stated that its proposals would support faster, more consistent supervisory action and reduce opportunities for companies to exploit regulatory differences.

Binance's failed MiCA licensing and lapsed registrations

• ▪Binance failed to secure a license under the European Union's Markets in Crypto-Assets Regulation (MiCA) during the summer of 2026.
• ▪In September 2026, reports emerged that European Central Bank President Christine Lagarde had intervened with Greek officials over Binance's failed MiCA license application.
• ▪Binance withdrew its Greek MiCA license application on June 24, 2026, after reports emerged that the Hellenic Capital Market Commission intended to reject the filing.
• ▪On September 18, 2026, Binance stated it complies with applicable regulatory requirements, is working to become MiCA-authorized, and remains committed to operating in Europe on a long-term compliant basis.
• ▪Binance's local registrations in several European Union member states, including France, Spain, and Poland, lapsed and became invalid under the MiCA regime.

MiCA wind-down rules and deadlines

• ▪Days before the July 1, 2026 deadline, the chairman of Spain's securities regulator ruled out any extensions or exceptions for unlicensed crypto firms.
• ▪Under MiCA rules, unlicensed crypto companies had to wind down their European Union businesses starting July 1, 2026, serving existing customers only to help them transfer or sell their crypto holdings.

Debatable claims

• ▪Routing EU crypto traders through offshore entities undermines the integrity of MiCA
• ▪Binance's use of reverse solicitation to serve EU customers is a legitimate practice
• ▪ESMA should have direct enforcement powers over non-EU crypto firms