1 week ago
Binance Keeps Serving Europe Through MiCA Licensing Workarounds
Europe created a rule called MiCA to make crypto companies obtain permission to operate across the European Union.
Binance did not receive that permission and withdrew its application in June.
However, the company says some customers contact it on their own, which may be allowed under a rule called reverse solicitation.
Binance also sends some European customers’ trades through a company in Abu Dhabi.
This has allowed Binance to keep serving some people in Europe.
Regulators are checking whether the company is winding down its business properly.
In several countries, customers were mostly allowed to take out their money but not trade.
Binance says it is working toward getting an EU-wide license.
Binance withdrew its EU license application on June 16, before a Greek regulator could consider it.
The exchange is relying on reverse solicitation and routing some EU customers’ trades through Abu Dhabi.
MiCA was designed to create uniform crypto regulation, but Binance has not been fully removed from the EU market.
Customers in six countries were generally restricted to withdrawing funds, although some regained access through reverse solicitation.
Binance remained the world’s largest crypto exchange, with more than 45% of global spot trading volume in late August.
- Who
- Binance, European regulators, and customers in the European Union.
- What
- Binance continues serving some EU customers despite not obtaining a MiCA license.
- Where
- Across the European Union, with some customer trading routed through an entity in Abu Dhabi.
- When
- Its application was withdrawn on June 16, ahead of the July 1 MiCA deadline; trading data cited in the report covers late August.
- Why
- Binance is relying on reverse solicitation and different regulatory treatment for its Abu Dhabi entity while seeking MiCA authorization.
Binance’s Position
Regulatory Concerns
Continued European operations
Binance’s Position
Binance says it follows regulations in every jurisdiction where it operates and is committed to operating in the EU on a long-term, compliant basis.
Regulatory Concerns
European regulators are examining whether Binance is appropriately winding down its business after failing to obtain the required authorization.
Reverse solicitation
Binance’s Position
Binance interprets the rule as allowing customers who approach the company without marketing prompts to be onboarded.
Regulatory Concerns
The workaround may undermine MiCA’s intended goal of ensuring that crypto firms serving EU customers hold the appropriate license.
Effect of losing the license
Binance’s Position
A Binance adviser cited in the report said the lack of a license does not necessarily require closing all European customer accounts.
Regulatory Concerns
Authorities face the practical problem that abruptly ejecting Binance could leave customers needing access to their funds.
Key facts
- License application
- Binance withdrew its application on June 16, before the Hellenic Capital Market Commission could discuss it.
- MiCA deadline
- The relevant licensing deadline was July 1.
- Global market share
- Binance accounted for more than 45% of global spot crypto trading volume in late August, according to Kaiko.
- European market share
- Its share of euro-denominated trades ranged from 3% to 4% during the same period.
- Local entities
- Binance had local entities in France, Spain, Italy, Poland, Sweden, and Lithuania.
- Customer access
- Customers in those countries were mostly allowed to withdraw funds but not actively trade, although some regained access through reverse solicitation.
- U.S. settlement
- Binance agreed to a $4.3 billion settlement with the United States government in 2023.
Quotes
Nina-Luisa Siedler
Lecturer at the Berlin University of Applied Sciences and MiCA compliance adviser
“The fact that they did not obtain the license does not necessarily mean that they need to close all accounts they have for European customers”
livemint.com
Binance
The crypto exchange discussed in the article
“We are actively working toward becoming MiCA-authorised and view this as an important step in providing users with a consistent, regulated, and trusted service across the European market”
livemint.com
Sources
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