European financial regulators are scrutinising Binance's continued operations in the EU, months after the bloc's new crypto rules took effect. According to a report in the Financial Times, the exchange may be exploiting a legal loophole to serve clients without a proper licence.
Under the Markets in Crypto-Assets Regulation (MiCA), which came into force on 1 July, crypto firms must obtain authorisation to offer services within the EU. Binance failed to secure such a licence, and unlicensed companies were expected to wind down their EU operations immediately, only assisting customers with transferring or selling their holdings.
However, Binance has continued to serve European users, relying on a provision known as "reverse solicitation." This exemption allows non-EU firms to provide services to EU clients if those clients initiate contact entirely on their own initiative. Regulators, including the European Securities and Markets Authority (ESMA) and national bodies in France, Germany, and Greece, are now questioning whether Binance's use of this exemption is legitimate.
A narrow exception under scrutiny
ESMA has been clear that reverse solicitation should be interpreted narrowly. "The reverse solicitation exemption should be understood as very narrowly framed. It should be regarded as the exception and not be used to circumvent MiCA requirements," the authority told the Financial Times.
The Dutch market watchdog AFM echoed this sentiment, stating that "crypto asset service providers cannot simply claim reverse solicitation: there are clear requirements and guidelines that must be met."
Binance's local licences in countries such as France, Spain, and Poland lapsed under MiCA. In other EU states, customers are served by its Abu Dhabi entity, which has been regulated since December 2025. Despite the regulatory uncertainty, the user experience on Binance's platform has remained unchanged since the MiCA deadline.
One person familiar with the matter told the Financial Times that Binance operates "under reverse solicitation" in countries where it lacks a licence, and that the company is "seeing customers wanting to onboard" of their own accord. The same source added that Binance does not intend to grow its business this way in the long term.
Regulators have reportedly requested information from Binance and could impose fines if they are unsatisfied with the responses. They are also looking into other smaller crypto firms that may be using similar tactics.
Binance's response and regulatory reality
When contacted by Euronews, Binance declined to address the specific questions, instead stating that it "complies with applicable regulatory requirements in the jurisdictions in which it operates." A spokesperson added: "In Europe, Binance remains committed to operating on a long-term, compliant basis under the EU's Markets in Crypto-Assets Regulation. We are actively working toward becoming MiCA-authorised."
ESMA told Euronews it "does not comment on specific cases," but stressed that under MiCA, "the supervision, investigation, and enforcement are national competences." The Paris-based authority's role is to promote consistent supervision across the bloc by encouraging cooperation and information-sharing between national regulators.
This means any penalties against Binance would have to come from national authorities, not ESMA itself. The scrutiny adds to years of regulatory trouble for the exchange, which in 2023 agreed to pay $4.3bn (€3.8bn) in penalties in the United States and pleaded guilty to criminal charges related to money laundering and breaching US sanctions.
The situation highlights the challenges of enforcing EU-wide regulations in the crypto sector, where firms can easily operate across borders. As regulators tighten their grip, the question remains whether Binance's reliance on reverse solicitation will hold up under legal scrutiny or whether it will face significant fines and forced withdrawal from the EU market.
