EU Scrutinizes Binance for User Exemption Practices

Summary

• Binance's operations in the EU are under investigation by regulators from France, Germany, Greece, and the ESMA.
• The exchange failed to secure a MiCA license and was expected to cease EU operations by July 1.
• Potential fines are on the table if Binance's responses to inquiries are deemed inadequate.

Regulatory authorities in Europe are closely examining Binance's activities after the exchange did not obtain a necessary license under the new Markets in Crypto Assets (MiCA) regulations. The European Securities and Markets Authority (ESMA), along with national regulators from France, Germany, and Greece, is specifically looking into Binance's use of reverse solicitation, an exemption that allows services to be provided at the client's initiative.

Regulators have requested information from Binance and may take enforcement actions, including fines, if they find the information unsatisfactory. Under the MiCA framework, unlicensed entities were required to start winding down EU operations as of July 1, limiting their services to existing clients to facilitate the transfer of assets.

ESMA's guidelines indicate that reverse solicitation should be interpreted strictly, emphasizing that factual circumstances determine whether a client was solicited. The Dutch authority, AFM, has stated that companies cannot simply claim reverse solicitation without meeting specific criteria. French, German, and Greek regulators, as well as ESMA and AFM, have not commented further on Binance's situation.

Binance's EU Operations

Reports indicate that Binance serves clients outside the EU through a unit regulated in Abu Dhabi, which received authorization in December 2025. Previously, Binance was registered in six EU member states: France, Italy, Lithuania, Poland, Spain, and Sweden, but these registrations have lapsed under the MiCA rules.

The exchange asserts that it complies with all regulatory requirements across jurisdictions and is actively seeking MiCA authorization. In June, Binance withdrew its MiCA application in Greece shortly after reports suggested it would be denied. The company indicated plans to pursue authorization in another EU member state while implementing compliance measures before the July deadline, warning users of potential impacts.

No grace period has been allowed for unlicensed firms. Just before the deadline, Spain's securities regulator confirmed there would be no exceptions or extensions and that regulators were working with unlicensed firms to ensure client assets were properly managed.

Additionally, smaller firms are also under scrutiny by regulators, according to sources familiar with the investigation.