Binance under EU scrutiny after missing MiCA deadline

According to a report from CryptoPotato, Binance is now under scrutiny from European regulatory authorities regarding how the company continues its operations in the EU after missing full licensing under the Markets in Crypto-Assets Regulation (MiCA). At the core of the matter is whether Binance can rely on a narrow regulatory exemption known as "reverse solicitation," while the company's broader licensing status in the union remains unresolved (CryptoPotato).

It's worth noting that details in the report itself are currently limited, and CryptoPotato does not name which national regulatory authority is leading the investigation. 24markets has not been able to independently verify all individual details, but the regulations the investigation is reportedly based on are well documented by the EU regulator ESMA.

What is "reverse solicitation" under MiCA?

MiCA — EU Regulation 2023/1114 — establishes in Article 59 that crypto services can, in principle, only be offered in the EU by actors approved as a Crypto-Asset Service Provider (CASP) established within the union.

The only exemption for companies outside the EU is found in Article 61, known as reverse solicitation. The rule states that a third-country company does not need EU approval if a customer in the EU themselves, on their own and exclusive initiative, seeks out the service. However, the exemption is strictly limited: it only applies to the specific service the customer themselves requested, and potentially subsequent services of "the same type" within that specific customer relationship.

ESMA's hard line

The European securities regulator ESMA has been clear that Article 61 should not function as a backdoor for offshore actors. Already in October 2023, the regulator warned the market:

Reverse solicitation must be regarded as the exception — and it cannot be presumed, or exploited, to circumvent MiCA

In its final circular from December 2024, which now applies as binding guidance for national regulatory authorities such as BaFin in Germany, AMF in France, and CONSOB in Italy, ESMA sharpened the definition of what counts as marketing. The technology-neutral definition covers everything from banner ads, social media campaigns, and influencer collaborations to sponsorship deals, press releases, and search engine optimization aimed at EU audiences.

The regulator also rejected the industry's proposal to exempt generic brand building. Even a sponsorship deal on a football jersey without mentioning a specific token can, under ESMA's interpretation, be considered solicitation if it reaches EU users.

Standard agreements don't hold up

A key point in ESMA's guidance is that companies cannot protect themselves with standard click-through agreements or pop-up confirmations where the user themselves declares they are an "offshore investor." According to the regulator, such contractual disclaimers cannot override actual circumstances — if marketing reached the customer first, the agreement is legally worthless.

Legal advisors at firms such as Freshfields Bruckhaus Deringer and Maples Group have pointed out that the burden of proof lies with the company itself. If a national regulatory authority opens an investigation, the third-country company must be able to document the entire user journey and show that no marketing, affiliate link, or regional advertisement preceded the registration.

What does this mean for Binance?

If the investigation is confirmed and expanded, the consequences could be significant. Binance has previously operated in several European markets with varying degrees of national registration, but full MiCA approval at the EU level has proven challenging to achieve for several global exchanges. Without such a license, the company is in principle dependent on being able to trace all European customer activity back to the customer's own, unsolicited initiative — something ESMA has made increasingly difficult to document after the fact.

The industry organization AFME, for its part, has warned that ESMA's strict interpretation also creates problems for institutional investors in the EU seeking deep offshore liquidity and specialized hedging instruments, as even ongoing customer relationships can be treated as individual transactions.

Market context

The news comes during a period of high risk appetite in the crypto market. Bitcoin is trading around $84,600, and the Fear & Greed Index stands at 74 out of 100 — a level traditionally interpreted as "greed" among investors. Regulatory matters related to major exchanges like Binance have historically had limited short-term price impact, but could still affect sentiment if they escalate into formal sanctions or market exclusion in individual countries.

24markets will continue following the case and will update the article if national regulatory authorities publish formal decisions or Binance comments directly on the investigation.