Binance is facing more questions from European regulators over how it has been using the “reverse solicitation” rule to continue serving some EU customers without MiCA authorization.
The European Securities and Markets Authority (ESMA) and national regulators are checking whether Binance has used the exemption correctly. Under the rule, an overseas company can provide services to an EU customer if the customer approaches the company on their own and the company did not first target or solicit them.
Some regulators have already asked Binance for more information. According to the Financial Times, authorities could consider enforcement action, including fines, if they are not satisfied with Binance’s explanation.
ESMA said the reverse solicitation exemption is meant to be very limited. The regulator warned that it should be treated as an exception and not as a way for companies to avoid MiCA licensing requirements.
Binance said it is actively working toward obtaining MiCA authorization and follows the applicable rules in the countries where it operates.
The main question now is whether the customer relationships Binance has continued or accepted actually meet the conditions for reverse solicitation.
MiCA replaced many of the previous national crypto registration systems across the European Union. Companies covered by the transition period generally needed authorization by the end of June to continue providing regulated crypto services after the deadline.
Binance entered July without MiCA authorization after withdrawing its licensing application in Greece in June.
Despite this, parts of Binance’s European platform remained accessible. Tests in August reportedly found that users in several European countries could still create accounts and complete identity checks. Some active accounts also continued to have access to cryptocurrency deposits.
Binance was still not listed in ESMA’s register of authorized crypto asset service providers during those checks.
Access was not the same in every country. Some customers had already received instructions about service restrictions, while certain accounts were mainly limited to withdrawals. In France, users lost access to services such as spot and margin trading after July 1.
Binance had told affected customers that their assets would remain accessible while the restrictions were introduced.
The exchange had originally planned to obtain EU-wide authorization through Greece. That approval could have allowed Binance to provide covered services across the bloc through MiCA’s passporting system.
However, Binance withdrew its Greek application on June 24, before the transition period ended. The company said it planned to seek authorization through another EU country.
The licensing issue received more attention in September after reports claimed that European Central Bank President Christine Lagarde had contacted Greek officials about the process. Binance later said its European licensing plans remained in place and that it was still looking for another route to MiCA authorization.
As of Sept. 18, Binance had not announced a new MiCA authorization.
The latest regulatory questions also come as ESMA prepares to increase its focus on crypto companies under MiCA. Reverse solicitation is one of the areas the regulator plans to examine, along with outsourcing, operational resilience, liquidity and whether crypto firms have enough operations within the EU.
ESMA has also told national regulators to watch for signs that companies outside the EU are actively targeting European customers. This can include websites, online advertising, social media activity, local phone numbers and other signs of a company trying to build a presence in the region.
For Binance, regulators are now looking closely at how the exchange has used reverse solicitation since the July licensing deadline.
The company continues to say that it is working toward MiCA authorization and intends to operate in Europe while following applicable regulations.
