European Union regulators are scrutinizing Binance's continued service to European customers three months after the MiCA transitional period ended without the exchange holding a license, according to people familiar with the matter cited by the Financial Times.

The European Securities and Markets Authority (ESMA) and national regulators are questioning Binance's use of "reverse solicitation," a narrow exemption under Article 61 of the Markets in Crypto-Assets Regulation that allows non-EU firms to serve customers who approach them entirely on their own initiative.

Some regulators have already requested information from Binance about its continued EU activity. Authorities could pursue enforcement measures, including fines, if they conclude the exchange's interpretation of the exemption breaches MiCA.

Why did Binance lose its licensing path?

Binance entered July without a MiCA license after withdrawing its application with Greece's Hellenic Capital Market Commission on June 24. The exchange said the decision followed months of engagement with Greek regulators and uncertainty over whether the process could be completed before the transition deadline.

Binance said it would seek authorization in another EU member state but has not publicly identified the jurisdiction. It stressed it was not abandoning Europe and that its long-term objective remains obtaining MiCA authorization under the bloc's passporting framework.

The Greek route would have allowed Binance to operate across all 27 member states through a single authorization. Crypto-asset service providers without authorization were expected to wind down EU operations once the transitional period passed.

What does reverse solicitation actually allow?

The exemption applies only when an EU customer initiates contact with a foreign company at their "own exclusive initiative." ESMA has deliberately adopted a broad interpretation of what constitutes solicitation, and its guidelines make clear the concept is not limited to direct sales pitches:

• Promotions and advertisements can disqualify reliance on Article 61
• Broader brand advertising can also prevent a third-country firm from using the exemption
• ESMA explicitly rejected a narrower reading, warning it could create a loophole to circumvent MiCA

That breadth makes the exemption difficult to apply to large consumer-facing exchanges with established European user bases.

According to the FT, some services involving European customers have also been routed through a Binance entity regulated in Abu Dhabi under the Abu Dhabi Global Market framework. From MiCA's perspective, an Abu Dhabi entity remains a third-country provider, and its ability to serve EU customers depends on whether the activity genuinely meets the reverse solicitation requirements.

What precedent could the case set?

The outcome extends well beyond one exchange. Reverse solicitation has long existed in European financial regulation, but MiCA gives regulators their first opportunity to define how the concept applies to global crypto platforms that reach European customers through websites, apps and other digital channels.

A permissive interpretation could allow other offshore exchanges to retain European customers without immediately securing MiCA authorization. A restrictive reading would reinforce the requirement that major platforms obtain an EU license to actively serve the bloc.

For now, regulators appear to be gathering information rather than announcing formal action. ESMA maintains a central register of authorized crypto-asset service providers, and Binance's name is not on it. With the transition period over and Binance still pursuing authorization in an unnamed member state, its reliance on reverse solicitation now stands as the first major test of how aggressively Europe's new crypto rulebook will be enforced against offshore venues.