European financial regulators have sent formal information requests to Binance, the world's largest crypto exchange, over suspicions that the company is circumventing an order to wind down its EU operations. The Financial Times reports that the European Securities and Markets Authority (ESMA) is coordinating the investigation together with national regulators in France, Germany and Greece.

The question is whether Binance is misusing a narrow legal exemption in the Markets in Crypto-Assets Regulation (MiCA) to continue serving European retail customers without a license.

From license application to withdrawal

Binance originally applied for a MiCA license via the Greek financial regulator HCMC, which would have granted the company so-called passporting rights to operate throughout the EU. But on 16 June 2026 — the day before the supervisory board was due to vote on the application — Binance withdrew it. The withdrawal came after pressure from European central bank officials, including ECB President Christine Lagarde.

This meant Binance entered into the MiCA regulation's entry into force on 1 July 2026 without a valid EU license. From that date, unauthorised operators were expected to scale down operations and ensure an orderly exit for European customers.

EU demands answers: Binance suspected of MiCA loophole - Bilde 1

The exemption regulators believe is being stretched too far

At the core of the matter is MiCA's Article 61, which allows third-country operators to serve EU customers without a license if the service occurs at "the customer's own exclusive initiative" — that is, without prior marketing, localised websites or targeted advertising.

According to ESMA's own guidelines (reference ESMA35-1872330276-1899), the exemption should be interpreted strictly and applies to isolated cases, not as an operating model to retain an existing customer base built up over years of marketing.

The reverse solicitation exemption must be understood very narrowly. It is meant to be the exception, not used to circumvent MiCA requirements

This statement comes from an ESMA spokesperson in a comment to the Financial Times, and summarises the regulator's basic position on the matter.

EU demands answers: Binance suspected of MiCA loophole - Bilde 2

Six countries, announced shutdown — and reopening

Binance is reported to have notified users in six EU jurisdictions where the company previously had local registration — France, Spain, Italy, Poland, Sweden and Lithuania — that accounts would be placed in withdrawal-only mode or closed entirely.

However, journalists have uncovered that many of these users later had full trading access restored, after Binance reclassified them under the reverse solicitation provision. Legal advisor Yuriy Brisov at Digital & Analogue Partners points out that this is not in line with the intent behind the rule:

"Being regulated in Abu Dhabi doesn't help Binance under MiCA. When Binance says that some EU users are served through the ADGM entity, that means, in MiCA terms, that a non-EU company is serving those users," says Brisov, adding that the exemption was designed for isolated cases, not for retaining an established customer base.

Routing via Abu Dhabi in focus

Parts of the European trading activity are reported to have been routed through Binance's entity in the Abu Dhabi Global Market (ADGM). Regulators argue that ADGM is a third-country regime without any form of passporting status in the EEA, and that this structure therefore does not change the fundamental assessment of whether MiCA rules are being breached.

At the same time, Nina-Luisa Siedler, lecturer at Berlin University of Applied Sciences and MiCA expert, emphasises that retaining existing customers even without a license is not automatically illegal: "The fact that they didn't get the license doesn't necessarily mean they have to close all the accounts they have for European customers."

This points to a grey area in the regulation that supervisory authorities are now attempting to close through concrete requests for documentation.

Limited decline in euro trading

The figures suggest that measures so far have had a limited effect on Binance's European operations. Euro-denominated trading on the exchange has remained stable at between 3 and 4 percent of total volume, according to data cited by the Financial Times — a marginal decline even after the MiCA deadline took effect on 1 July 2026.

Binance itself denies that the company is operating in violation of the regulation. In a statement, the company says it is "actively working towards becoming MiCA-authorised" and considers this an important step towards a consistent and regulated service in the European market, while claiming to comply with applicable regulatory requirements in all jurisdictions in which the company operates.

What happens next

ESMA chair Verena Ross has signalled in meetings with the European Parliament's economic committee that the regulator's focus is now shifting from rule-making to supervision and convergence between member states, with reverse solicitation and operational resilience among crypto operators identified as priority areas for 2027.

Possible next steps for European authorities include administrative fines, orders for immediate cessation, and regional restrictions at the domain and IP level if Binance's model is deemed to be a circumvention of the regulation. For now, the case is at the investigation and documentation stage, and it is unclear when — or whether — formal sanctions will follow.

For Norwegian and Nordic crypto investors, the case is relevant because the outcome could affect how international exchanges such as Binance structure access for EEA citizens, as Norway is linked to the EU's financial market regulation through the EEA Agreement and is expected to implement similar frameworks for crypto-asset markets.