Binance Operates in Europe Without MiCA License... "Customers Sought Us Out First" as an Excuse

▲ Binance, European Union (EU)/AI-generated image

Virtual asset exchange Binance is currently under intense scrutiny from European regulatory authorities for continuing its operations in the European Union (EU) despite not having acquired the MiCA license. It is observed that if the accusation of illegally maintaining operations by misusing legal exception clauses as a circumvention method is proven, the company could face large-scale sanctions.

According to the virtual asset specialized media CryptoPotato on October 2 (local time), the European Securities and Markets Authority (ESMA), along with regulatory authorities in France, Germany, and Greece, has launched a thorough investigation into whether Binance is legitimately using the Reverse Solicitation exemption clause applied under the MiCA framework. According to MiCA regulations, offshore exchanges without a valid license are, in principle, not allowed to actively provide services to users in EU member states. Regulatory authorities are focusing on whether Binance resorted to legal loopholes to retain millions of European investors even after failing to obtain official authorization.

European regulatory authorities have made it clear that the reverse solicitation clause cannot be an escape route to avoid licensing obligations. This is because the rule only recognizes an exception when a customer directly requests a service entirely voluntarily, without promotion or solicitation from the exchange. ESMA emphasized that this clause should be applied only within a very limited scope. Authorities are verifying whether Binance's user agreement terms or the actual account opening process meet these exemption requirements, and have warned that if the exchange's interpretation is rejected, immediate administrative measures and an order to cease operations could be issued.

Binance's process of securing licenses in the European market has been problematic for several months. In France, it ceased support for new trading and switched to withdrawal-only services due to pressure from regulatory authorities, but it continues to allow new account openings in some other European countries, maintaining an unbalanced operation that has fueled regulatory skepticism. Binance has issued an official statement saying, “We comply with the regulations of each jurisdiction where we operate and are actively continuing discussions to officially acquire the MiCA license,” but the regulatory pressure is growing increasingly intense.

Experts predict that this investigation into Binance will be a critical watershed determining the success or failure of European virtual asset regulatory enforcement. If the illicit operations of a major exchange are tolerated, the effectiveness of the MiCA framework itself could be undermined, raising the possibility that regulatory authorities will impose strong exemplary sanctions.

[Article Summary]

-European regulatory authorities are investigating whether Binance, which has not secured a MiCA license, has illegally utilized the reverse solicitation clause.

-The key issue is whether the exemption clause, which applies only to voluntary customer requests, was misused for marketing and account opening.

-If authorities reject Binance's claims, severe sanctions such as large fines and expulsion from local operations will be unavoidable.

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