Binance is facing scrutiny from European regulators over its use of the reverse solicitation exemption under the European Union's Markets in Crypto-Assets (MiCA) framework, as authorities assess whether the exchange's services in the region comply with the bloc's licensing rules.

According to a report by the Financial Times, the European Securities and Markets Authority (ESMA), the EU's securities markets regulator, and regulators in France, Germany, and Greece are examining the exchange. The authorities are seeking to clarify whether Binance can legally operate in some European countries.

EU Regulators Review Binance's MiCA Exemption

Under MiCA, limited services are permitted when customers approach a company based outside the European Union on their own initiative. However, firms are not allowed to rely on this exemption as grounds for marketing or promotion within Europe. The provision is intended to accommodate genuine, customer-initiated demand rather than to serve as a substitute for obtaining authorization to operate in the bloc.

On that, regulators are reviewing how Binance has applied the provision to its European customers. ESMA considers reverse solicitation a narrow exception under the MiCA framework.

JUST IN: 🇪🇺 EU regulators question Binance over continued operations despite MiCA wind-down order, FT reports. pic.twitter.com/RN9upcEz35

— Crypto India (@CryptooIndia) October 1, 2026

Regulators in France, Germany, and Greece have reportedly asked Binance to provide data as part of the process. Their review centers on the exchange's current service model and whether it fulfills the requirements of MiCA.

Binance has stated that it complies with the rules of the markets in which it operates. The exchange is also said to be in talks for a MiCA license, though no final decision has been made on its current European operations.

The review follows Binance's challenges in obtaining approval under Europe's crypto framework. MiCA, which took full effect at the end of 2024, mandates that crypto service providers operating in the region adhere to certain licensing requirements, replacing the patchwork of national rules that previously governed the sector.

Binance Withdrew Its Greek MiCA Application

Earlier reports indicated that Binance pulled its application for a Greek MiCA license on June 24. Approval in Greece could have opened up EU markets through MiCA's passporting system, under which a firm authorized in one member state can offer its services across the entire bloc, but the exchange was not licensed by Greek authorities. Binance has since explored other avenues to gain approval in the European Union.

The MiCA transition period also introduced new requirements for crypto companies. As of July 1, unlicensed firms were limited in their ability to provide certain services to customers across the bloc.

Binance has, however, maintained some services for European users. Parts of its European business have been linked to its Abu Dhabi-regulated arm, an arrangement that now forms part of the regulatory review. Authorities are seeking to determine whether Binance's operations continue to fall within the bounds of reverse solicitation.

Under ESMA's guidance, companies are not allowed to claim independent customer requests as a matter of course through customer agreements. The exemption is reserved for customers who initiate contact without first being solicited.

Binance Could Face Enforcement Action

If regulators determine that Binance has violated MiCA rules, the review may result in enforcement. However, authorities have not announced any final penalty or formal enforcement decision. Any action taken would be based on the outcome of the regulatory review, and Binance would be given a chance to respond to the concerns raised by European authorities.

The case may ultimately offer greater clarity on how reverse solicitation should be interpreted in Europe's crypto market. Other companies serving EU customers without local authorization could also face similar questions about their arrangements.

Meanwhile, Binance continues to operate as it navigates Europe's evolving crypto laws. Its licensing strategies may prove decisive in how it serves European customers under the comprehensive MiCA regime. The key question at present is whether the exchange's customer services meet the narrow exemption — an outcome that will depend on regulators' evaluation of Binance's operations and its interactions with customers.

Source: Live Bitcoin News