The review centers on whether Binance can rely on reverse solicitation while its broader European licensing position remains unresolved.
EU regulators are reportedly questioning Binance over its use of a legal exemption to keep serving some European customers after the exchange failed to win a MiCA license.
Enforcement action is possible if they reject its interpretation of the rule.
Regulators Weigh the Reverse Solicitation Exemption
The Financial Times, citing people familiar with the matter, reported that the European Securities and Markets Authority (ESMA) and regulators in France, Germany and Greece are reviewing whether Binance qualifies for MiCA’s “reverse solicitation” exemption.
The platform was ordered to wind down its EU business after it failed to secure a license this summer. Under the rules, unlicensed firms were supposed to take “immediate steps” to wind down from July 1 and stop serving customers, other than to help them transfer or sell their holdings.
In June, Binance had said that it had worked with regulators for about 18 months and had received no formal sign of rejection. But it later withdrew an application in Greece and stated it would pursue authorization in another member state.
Another report from the Wall Street Journal alleged that European Central Bank President Christine Lagarde personally asked Greek Prime Minister Kyriakos Mitsotakis to block Binance’s application after Greek regulators had all but approved it.
By early June, the application had cleared its technical review, and the mandatory 40-day assessment period had ended without objections. Her reasoning traced back to the exchange’s earlier guilty plea to US money-laundering and sanctions violations, and to a worry that letting it in would push more people toward dollar-denominated stablecoins while the ECB works on a digital euro.
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ESMA Asks for More Enforcement Powers
A day before the FT report, ESMA stated that European regulators should get more powers to enforce MiCA. According to Reuters, it wants authority to order crypto companies to freeze assets when there are reasonable grounds to suspect links to crime, arguing that current procedures are so slow that suspicious assets have often disappeared by the time a freeze is requested.
National regulators could also be able to remove websites tied to scams or unauthorized crypto firms, and to act against non-EU companies that actively solicit EU investors without authorization.
ESMA also proposed banning certain misleading marketing techniques, adding rules for third-party marketing and requiring full cost information for customers. The proposals form part of its response to a consultation on MiCA, which is under review. A group of European central banks published its own response last week, and Reuters noted that some regulators have voiced concern about divergence and patchy enforcement of the rules.
