European regulators are reportedly scrutinizing Binance‘s use of a legal exemption to continue serving customers in the European Union without authorization under the bloc’s crypto rules.
The European Securities and Markets Authority (ESMA) and regulators in France, Germany and Greece are examining Binances use of reverse solicitation under the Markets in Crypto-Assets Regulation (MiCA), the Financial Times reported on Thursday.
Binance withdrew its Greek MiCA application in June and said it would seek authorization in another EU member state.
Binance told Cointelegraph on Sept. 18 that it continues pursuing MiCA authorization and remains committed to operating in Europe on a long-term compliant basis.
Reverse solicitation under scrutiny
Binance is relying on reverse solicitation to continue serving some EU customers, the report said, citing a person familiar with the matter.
The exemption allows non-EU crypto asset service providers (CASPs) to serve customers who approach them entirely on their own initiative, but ESMAs guidelines stress that companies cannot use it to circumvent MiCA requirements.
Related: Binance disappears from Google Play in certain EU countries
Ahead of the end of MiCA‘s transitional period on July 1, Binance told Cointelegraph that EU access would depend partly on a user’s jurisdiction, account status and “servicing entity.” Some EU traders are now being served through Binances Abu Dhabi-regulated entity, according to the FT.
Binance did not confirm whether it was in talks with EU regulators, telling Cointelegraph that it “complies with applicable regulatory requirements.”
ESMA pushes for stronger enforcement powers
ESMA on Wednesday called for stronger powers over non-EU companies that solicit European investors without MiCA authorization in its response to the European Commissions consultation on reviewing the regulation.
ESMA said its proposals would support faster, more consistent supervisory action across the EU and reduce opportunities for companies to exploit regulatory differences.
Related: EU banking watchdog calls for crypto lending rules under MiCA
The push follows ESMA Chair Verena Ross saying Monday that the regulators MiCA focus had shifted “from rulemaking towards supervision and convergence.”
Binance absent from ESMAs non-compliant list
ESMAs register of non-compliant crypto providers grew from 164 entries on July 16 to 173 in its Sept. 30 update.
Binance does not appear on the latest register, which MiCA describes as “non-exhaustive” and which ESMA updates based on information from national authorities and other sources.
ESMA told Cointelegraph it does not comment on specific cases, adding that supervision, investigation and enforcement of crypto asset service providers under MiCA are handled by national authorities. It also said the information in its MiCA register is provided by national competent authorities, with entries reflecting information received from the relevant authorizing or notified regulator.
Germanys Federal Financial Supervisory Authority (BaFin) declined to provide further information, citing legal confidentiality obligations. The French and Greek watchdogs had not responded by publication.