European regulators have opened a formal line of inquiry into how Binance has kept serving customers across the bloc without holding a license under the Markets in Crypto-Assets regulation, known as MiCA. The Binance EU MiCA investigation centers on the exchange’s use of a legal carve-out called “reverse solicitation,” which in theory lets overseas firms deal with EU clients only when those clients approach the company first, with no advertising or active promotion involved. EU regulators are now examining whether Binance stretched that exemption well beyond its intended scope after missing the deadline to get properly licensed.
Key takeaways
EU regulators, led by ESMA, are investigating whether Binance improperly used the reverse solicitation exemption to keep serving customers after failing to secure a MiCA license.
Binance withdrew its MiCA license application in Greece in June following political intervention and central bank opposition.
ESMA says reverse solicitation “must be interpreted very narrowly” and is not a workaround for MiCA licensing requirements.
Binance stopped crypto trading in France but kept opening new EU accounts in other markets after the licensing deadline passed.
Binance faces a separate US Department of Justice probe into possible Iran sanctions violations, adding to its regulatory pressure.
EU Regulators Scrutinize Binance’s Use of the Reverse Solicitation Exemption
At the heart of the matter is a narrow legal provision that was never meant to become a backdoor into the European market. Regulators want to know whether Binance’s EU customer relationships genuinely started on the customers’ own initiative, or whether the exchange’s marketing and continued account openings crossed a line MiCA was designed to prevent.
How Reverse Solicitation Is Supposed to Work
Under Article 61 of MiCA, an overseas crypto firm can legally serve an EU client without local authorization only if that client initiates contact entirely on their own, without any prior advertising, promotion, or solicitation from the company. A firm cannot claim the exemption if it, or anyone acting for it, had previously reached out to prospective customers in the EU through marketing or other communications. Even contractual language asserting that a client approached the company independently does not change the facts of how the relationship actually began.
ESMA’s Position on the Exemption
ESMA has been blunt about how it reads the rule. The regulator stated that the exemption “must be interpreted very narrowly” and must be treated as “the exception and not be used to circumvent MiCA requirements.” Some national regulators have already requested detailed information from Binance about its reliance on the exemption, and enforcement action, including fines, is on the table if the exchange’s answers fall short.
A Licensing Journey That Fell Apart in Greece
Binance’s path to full MiCA authorization hit a wall months before this scrutiny began. The exchange failed to secure a MiCA license before the transition period, leaving it without the regulatory standing needed to keep operating freely across the bloc once the grace period expired.
Political Opposition and the Withdrawal
Binance had initially pursued authorization through Greece, a route that would have let it passport a single license across other EU member states. That plan collapsed in June, when the exchange withdrew its Greek application following high-level political intervention and opposition from the central bank. Binance then pivoted toward operating via the UAE instead. The company stated that it “complies with applicable regulatory requirements in the jurisdictions in which it operates” and that its “products and services continue to be reviewed and aligned with relevant regulatory obligations.” Binance added that it is “actively working toward becoming MiCA-authorised” and views the process as “an important step in providing users with a consistent, regulated, and trusted service across the European market.”
France and the Current Patchwork of Access
The clearest sign of how the licensing gap has played out on the ground is France. Binance stopped offering crypto trading services there after failing to obtain a MiCA license, limiting French users to withdrawing their existing crypto holdings rather than trading. Access elsewhere in the EU has been far less consistent, which is precisely what drew regulators’ attention in the first place.
Workarounds Keep Binance Active Despite the Deadline
People with knowledge of the situation say that even though Binance missed the licensing deadline and withdrew its Greek application, the exchange has kept running substantial operations within the EU by relying on various side doors and workarounds. According to ESMA, Binance kept letting users open new accounts in certain European markets even after it pulled its application via Greece back in June.
Users who approached the platform independently were onboarded under the company’s own interpretation of reverse solicitation.
This is where the Binance EU MiCA investigation matters most for the wider market: if a company of Binance’s size can keep significant operations running without full authorization, it raises hard questions about how enforceable MiCA’s licensing regime really is during its early rollout.
Why This Case Could Reshape MiCA Enforcement
ESMA is moving from a setup phase into active enforcement of MiCA, and the agency has flagged reverse solicitation as one of its 2027 supervisory priorities, alongside outsourcing arrangements, operational resilience, liquidity management, and whether firms maintain adequate infrastructure inside the EU. The outcome of the Binance case is widely expected to serve as the first major test of how strictly the exemption will actually be applied. A narrower reading, if regulators push it through, would carry consequences well beyond one exchange, since other overseas crypto firms leaning on reverse solicitation to reach EU customers without full authorization would face the same tightened standard.
The pressure on Binance is not confined to Europe, either. The exchange is also facing a US Department of Justice investigation into possible Iran sanctions violations, led by the Attorney’s Office for the Southern District of New York together with the DOJ’s Criminal Division. Taken together, the parallel EU and US scrutiny signals that Binance’s regulatory footprint is being tested on multiple fronts at once, even as the company insists it is working toward full MiCA authorization.
Article produced with the assistance of artificial intelligence and reviewed by the editorial team.