Binance has come under fire from EU regulators for continuing to serve customers within the union despite failing to secure authorization under the bloc’s Markets in Crypto-Assets regime. The new development could be a major test for the novel regulatory framework.
A clever loophole
The leading cryptocurrency exchange was supposed to wind down its EU operations after it did not manage to secure a license.
However, Binance has seemingly relied on a regulatory loophole known as "reverse solicitation" according to the Financial Times. The European Securities and Markets Authority (ESMA) as well as national regulators are currently examining this matter.
Binance has been specifically asked to provide information about the legal basis on which it continues to provide services within the bloc.
The exchange could face enforcement measures as well as financial penalties if it went beyond what the aforementioned exemption actually permits.
Binance's EU exit
As reported by U.Today, Binance is no longer able to provide services for European customers after it failed to get licensed through Greece during the MiCA transition period that ended on July 1. Since its Greek application was expected to be rejected, the exchange giant simply opted to withdraw it.
Binance warned affected European users that services would have to be restricted before the deadline. Customers were notified about the cessation of services in advance.
However, Binance did not simply disappear from the bloc. Some European users can still trade on the exchange even after the expiration date.
EU customers can still use the crypto titan's services via entities outside the European Union. Some customers claim that Binance was operating via an Abu Dhabi-based business. Binance secured full authorization from the Financial Services Regulatory Authority of Abu Dhabi Global Market in December 2025.
The dispute could test the boundaries of the new regulatory regime that was supposed to make crypto regulation way less fragmented.
Making it possible for offshore exchanges to serve EU customers via the aforementioned loophole could weaken that structure.
At the same time, Binance is not giving up on the EU, and it has not abandoned its effort to obtain a MiCA license after its failure in Greece.
The crypto juggernaut has responded to the latest regulatory scrutiny by stating that it complies with requirements in the jurisdictions. The company also reiterated that it keeps working on becoming MiCA-authorized.