European authorities are reportedly investigating Binance’s reliance on a legal loophole to continue offering services to European Union clientele without holding proper authorization under the region’s digital asset framework.
The European Securities and Markets Authority (ESMA), alongside regulatory bodies in France, Germany, and Greece, are looking into Binance’s application of reverse solicitation in the context of the Markets in Crypto-Assets Regulation (MiCA), as reported by the Financial Times on Thursday.
Binance retracted its Greek MiCA application back in June, stating at the time that it would pursue regulatory approval within a different EU member state.
On September 18, Binance informed Cointelegraph that it remains engaged in obtaining MiCA certification and continues to be dedicated to a long-term, fully compliant operational presence throughout Europe.
Reverse solicitation under scrutiny
According to the publication, which cited an individual with knowledge of the situation, Binance is utilizing reverse solicitation to maintain services for certain EU clients.
This particular exemption permits digital asset service providers (CASPs) based outside the EU to cater to users who contact them entirely on their own volition; however, official ESMA guidelines emphasize that businesses cannot leverage this provision to bypass fundamental MiCA obligations.
Related: Binance disappears from Google Play in certain EU countries
Prior to the conclusion of the MiCA transition phase on July 1, Binance communicated to Cointelegraph that access for EU participants would rely in part on each individual user’s location, profile status, and the specific corporate entity servicing them. The Financial Times noted that several European traders are currently being serviced via Binance’s subsidiary regulated in Abu Dhabi.
While choosing not to confirm whether ongoing discussions are taking place with European regulators, Binance stated to Cointelegraph that it strictly adheres to all applicable regulatory mandates.
ESMA pushes for stronger enforcement powers
In its formal feedback regarding the European Commission’s public consultation to review the regulatory framework, ESMA requested expanded regulatory authority on Wednesday to target foreign entities soliciting European investors without official MiCA approval.
The authority indicated that these proposed measures would facilitate quicker, more uniform supervisory actions across the entire EU while minimizing the chances for firms to exploit regulatory discrepancies between jurisdictions.
Related: EU banking watchdog calls for crypto lending rules under MiCA
This push follows statements made on Monday by ESMA Chair Verena Ross, who pointed out that the organization’s primary focus under MiCA has transitioned away from drafting rules and toward active supervision and regulatory convergence.
Binance absent from ESMA’s non-compliant list
The official ESMA directory of non-compliant digital asset firms expanded from 164 listings on July 16 up to 173 within its update released on September 30.
Binance is notably absent from this recent registry, which the MiCA legislation characterizes as non-exhaustive and which ESMA continuously revises utilizing intelligence gathered from national watchdogs and alternative channels.
In communications with Cointelegraph, ESMA declined to comment on specific company cases, clarifying instead that oversight, inquiries, and regulatory enforcement involving digital asset service providers under MiCA fall under the direct jurisdiction of national authorities. The agency also noted that data contained within its MiCA database originates directly from national competent authorities, reflecting information supplied by the relevant licensing or notified regulatory bodies.
Germany’s Federal Financial Supervisory Authority (BaFin) opted against disclosing additional details, pointing to statutory confidentiality requirements. Meanwhile, French and Greek regulatory watchdogs had failed to issue statements prior to publication.
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Originally published at https://cointelegraph.com/news/europe-binance-questions-esma-tighter-mica-oversight?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound.
