Abstract:
According to people familiar with the matter, EU officials are questioning Binance’s continued operations there. The company received instructions to shut down its operations in the EU, but used a legal exemption to continue to provide services to local users.
Binance, the world’s largest cryptocurrency exchange, lost its license to provide services to EU customers after its application under a new licensing regime was rejected earlier this year, threatening access to millions of users.
According to the EU’s new regulation called the Markets in Crypto-Assets Regulation (MiCA), cryptocurrency companies must obtain a license by the end of June before they can continue to operate within the EU. Without a license, Binance will not be eligible to continue operating in the EU from July.
It is reported that the European Securities and Markets Authority (ESMA) and various regulatory agencies are investigating Binance’s use of the “Reverse Solicitation” mechanism. This is a legal exemption that allows non-EU institutions to provide financial services to EU clients, provided that the clients actively seek to enter into such business relationships of their own free will.
European Securities and Markets Authority said: "The reverse tender exemption should be understood in a very narrow framework. It should be regarded as an exception and not used to circumvent the requirements of MiCA."
Some regulators have reportedly requested information from the company and may take enforcement action, including fines, if they are not satisfied with Binance's response.
Binance responded that "we are actively working to obtain MiCA authorization," adding that "it complies with applicable regulatory requirements in the jurisdictions in which it operates."
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Binance failed to obtain a license and will stop providing services to European customers
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