Binance Faces EU Regulatory Probe Over Use of MiCA Exemption for European Clients
Summary
- Reports said Binance, the world’s largest cryptocurrency exchange, is under regulatory scrutiny over its provision of services to European clients using a MiCA exemption.
- The European Securities and Markets Authority (ESMA) and regulators in France, Germany and Greece are reviewing whether Binance can rely on MiCA’s reverse solicitation exemption.
- Reports said that if regulators reject Binance’s interpretation of the exemption, the matter could lead to regulatory enforcement action.
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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 provide services to some clients in Europe.
Wu Blockchain 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 exception that allows crypto-asset service providers to offer services without MiCA authorization under certain conditions when an EU client independently requests the service and the provider has not first promoted or solicited it.
Binance has continued providing services to some European clients on that basis despite not having secured authorization under MiCA, the report said.
Regulators are examining whether Binance’s method of providing those services meets the requirements for reverse solicitation. If authorities do not accept Binance’s interpretation of the exemption, the matter could lead to enforcement action.
