European regulators question Binance's reliance on MiCA's reverse-solicitation exemption

The exemption Binance is relying on is narrow. It applies when a customer takes the initiative to approach a provider based outside the EU. Under MiCA it cannot substitute for authorisation or be used to actively target European customers ^[8]. "The reverse solicitation exemption should be understood as very narrowly framed," ESMA said ^[9]. The Dutch regulator, the AFM, has given crypto firms in general a similar warning. "Crypto asset service providers cannot simply claim reverse solicitation," it said ^[11].

So far the main public evidence comes from a press experiment. Sandmark's staff used a European identity document and a residential address to open and verify an account, then deposited crypto into it ^[5]. Sandmark said the account was created after July 1 ^[5]. The August 19 test came 49 days after the deadline ^[1]. Sandmark reported that repeat tests from several other European locations gave similar results, with fully verified accounts opened in two countries ^[6].

The thing this test doesn't tell you is who started the relationship. According to the Financial Times report, the regulators' review centres on exactly that question: whether Binance's European customers genuinely initiated their relationships with the exchange ^[1][10]. A reporter who goes to the site unprompted and signs up is, by the design of the test, a customer who took the initiative. Proving solicitation needs evidence of how Binance reached the people it onboarded. An account-opening test does not collect it. The reporting also does not say how many EU customers Binance has signed up since July 1, so there is nothing to compare a handful of test accounts against.

Sandmark's other finding is easier for a regulator to use, because what a sign-up screen shows an applicant can be checked directly, without establishing anyone's intent. Its tests produced no warning that Binance lacked MiCA authorisation ^[7].

Binance said it complies with applicable regulatory requirements in the jurisdictions where it operates and regularly reviews its products and services against those obligations ^[12]. "We are actively working toward becoming MiCA-authorised," the company said ^[13]. Before the new regime took full effect, it held local licences in France, Spain and Poland, and those have since lapsed ^[14]. Its record with regulators includes 2024, when it agreed to pay $4.3 billion to US authorities after pleading guilty ^[18].