EU Questions Binance Over Continued Services After Wind-Down Order
EU regulators are reportedly examining Binance’s use of reverse solicitation, a narrow MiCA exception for services initiated by customers.
Key Notes
- The FT reports scrutiny of Binance’s continued EU services.
- Reverse solicitation requires the customer’s exclusive initiative.
- Binance says it is pursuing MiCA authorization.
European Union officials are questioning Binance’s reliance on a legal exception to keep serving customers after a wind-down order, the Financial Times reported on October 1, citing people familiar with the matter.
The scrutiny centers on reverse solicitation. According to the report, the European Securities and Markets Authority and national regulators are examining Binance’s approach, with some authorities requesting information and potentially considering fines.
Binance told the FT it is pursuing MiCA authorization and complies with applicable rules. Reuters, which covered the report, said it could not independently verify it. The reported inquiries do not establish that Binance has breached the rules.
A Narrow Exception to MiCA Licensing
The Markets in Crypto-Assets regulation generally requires authorization for businesses providing regulated crypto services in the EU. Its Article 61 allows an overseas firm to serve an EU customer without that authorization when the customer initiates the service entirely on their own.
That exception depends on how the relationship starts. If a provider solicits the customer, including through an affiliate or someone acting on its behalf, a contractual statement describing the relationship as customer-initiated does not override the facts.
The provision also does not give the firm permission to market new types of crypto-assets or services to that customer. This makes the exemption narrower than a general right to retain EU customers or sell them an expanding product range.
ESMA’s supervisory guidelines treat solicitation broadly, covering online advertising, social media, affiliate campaigns and sponsorships. Even general brand advertising can qualify, depending on the circumstances.
The guidelines also expect firms to keep records showing how a customer relationship began. They distinguish a transaction initiated by the customer from later promotional activity encouraging that person to return and trade again.
Wind-Down Rules Limit Continuing Services
The EU’s final MiCA transitional deadline passed on July 1. Before that date, ESMA instructed unauthorized providers to stop opening new EU accounts and cease marketing while arranging an orderly exit.
Its June 23 statement allowed continuing services only as needed to sell or transfer assets, reallocate holdings or close positions. Custody could continue for the period strictly necessary to complete that process, with customers given clear information about the timetable.
Those requirements explain why continued access to a platform is not, by itself, evidence of full authorization. A business winding down may still need to process withdrawals or close positions, while reliance on reverse solicitation raises a separate question about how individual services were requested.
CoinScreamer previously covered Binance’s French trading restrictions following the deadline. The latest scrutiny concerns the legal basis for continuing customer relationships after that transition.
Binance’s European Licensing Path Remains in Focus
In its June 24 European update, Binance said it had withdrawn its application in Greece and would pursue authorization in another member state. The company said no formal decision had been issued before it withdrew.
CoinScreamer subsequently reported on its search for alternative jurisdictions. That licensing effort and the reverse-solicitation exception address different routes to serving customers: one concerns formal regulatory permission, while the other depends on the circumstances of a particular customer’s initiative.
The unresolved issue is whether Binance’s continuing relationships satisfy that narrow test. The FT’s account describes regulatory questions and possible enforcement, rather than an announced penalty or a final determination.
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