Binance: "European Regulations Pushed Users Away"...Complains 70% of Funds Left

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Binance has criticized that the European Union's cryptocurrency regulations are pushing investors out of the scope of regulatory oversight rather than attracting them into the institutional framework. Binance's own statistics, showing that 70% of funds withdrawn by European users went to self-custody wallets instead of regulated platforms, have ignited debate over the effectiveness of MiCA.

According to cryptocurrency media outlet BeInCrypto on July 9 (local time), Richard Teng, co-CEO of Binance, claimed at the Reuters NEXT Asia Summit in Singapore that the European Union's Markets in Crypto-Assets (MiCA) regulation is producing results contrary to its original intent. Teng stated that 70% of the funds withdrawn by affected EU users moved to self-custody wallets, while only 30% went to MiCA-licensed platforms.

Binance withdrew its MiCA license application in Greece at the end of June and ceased services for new EU customers starting July 1. Teng explained that the approval process was repeatedly delayed without explanation, and the application was withdrawn to avoid a situation requiring users to make a hasty transition. Binance's changes in the EU market coincided with its largest weekly fund outflow in over three years.

Teng, a former regulator, pointed out that if strong regulations push users towards self-custody wallets, the investor protection effects targeted by MiCA could also weaken. Teng stated, "When funds go into self-custody wallets, the risks actually increase. There are no proper anti-money laundering and know-your-customer controls." He argued that while exchanges operate AML and KYC procedures, non-custodial wallets lack the same control systems.

Views on self-custody are divided. Proponents of self-custody argue that holding private keys directly avoids counterparty risks revealed during past exchange collapses and consider the power to directly control assets a core function of cryptocurrency. Furthermore, Europe's crypto travel rule requires exchanges to collect transaction information related to self-custody wallets, so it's not a situation where regulators are completely unaware of related fund movements.

Binance has received proposals for license applications in other EU countries and maintains its commitment to the European market. As European authorities began reviewing MiCA custody regulations this week, future licensing decisions are expected to provide the first concrete basis for evaluating the phenomenon of 70% of Binance user funds moving to self-custody wallets.

[Article Summary]

-Binance stated that 70% of funds withdrawn by European Union users moved to self-custody wallets.

-Only 30% of funds moved to MiCA-licensed platforms, and Richard Teng argued that strong regulations weaken the scope of regulatory oversight.

-Binance withdrew its MiCA license application in Greece and ceased services for new EU customers starting July 1.

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