European regulators are examining Binance's reliance on a legal exemption to continue serving customers in the European Union without full authorization under the bloc's Markets in Crypto-Assets Regulation (MiCA), according to a Financial Times report published Thursday.

The European Securities and Markets Authority (ESMA), together with national authorities in France, Germany and Greece, is scrutinizing Binance's use of the reverse solicitation exemption, the FT reported, citing a person familiar with the matter.

The stakes for the exchange's European operations are considerable. Reverse solicitation allows crypto asset service providers (CASPs) established outside the EU to serve customers who initiate contact entirely on their own initiative. ESMA's published guidelines, however, stress that firms cannot use the exemption to circumvent MiCA's authorization requirements. If regulators conclude that Binance is effectively soliciting EU clients rather than responding to their unsolicited approaches, the firm could face enforcement action across multiple jurisdictions.

Binance's EU licensing position has grown increasingly fragile. The exchange withdrew its Greek MiCA application in June and said it would seek authorization in another EU member state. In a Sept. 18 statement to Cointelegraph, Binance said it continues to pursue MiCA authorization and remains committed to operating in Europe on a long-term, compliant basis.

Servicing through Abu Dhabi

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." The FT reported that some EU traders are now being served through Binance's Abu Dhabi-regulated entity, shifting the operational and supervisory footprint of the exchange's European business outside the bloc.

Binance did not confirm whether it was in talks with EU regulators. The company told Cointelegraph it "complies with applicable regulatory requirements."

Germany's Federal Financial Supervisory Authority (BaFin) declined to provide further information, citing legal confidentiality obligations. ESMA and the French and Greek watchdogs had not responded to requests for comment by publication.

Not on the register

Notably, Binance does not appear on ESMA's register of non-compliant crypto providers. That list grew from 164 entries on July 16 to 173 in its Sept. 30 update. ESMA describes the register as "non-exhaustive" and updates it based on information from national authorities and other sources, meaning absence from the list carries no formal significance.

ESMA seeks stronger powers

The scrutiny coincides with a broader push by ESMA for expanded enforcement authority over non-EU firms that solicit European investors without MiCA authorization. In its response on Wednesday to the European Commission's consultation on reviewing the regulation, ESMA called for stronger powers, arguing that its proposals would support faster and more consistent supervisory action across the EU and reduce opportunities for companies to exploit regulatory differences between member states.

The initiative follows remarks by ESMA Chair Verena Ross on Monday that the regulator's MiCA focus had shifted "from rulemaking towards supervision and convergence." That transition marks a new phase for the regime: with the Level 1 and Level 2 texts largely in place, supervisory attention is moving to how firms structure their European access — and to whether exemptions designed for genuine client initiative are being used as a substitute for authorization.

For Binance, the operational consequences of an adverse finding would extend beyond a single market. France, Germany and Greece are among the EU's larger crypto markets, and a coordinated determination that reverse solicitation does not cover the exchange's EU-facing activity could force the firm to accelerate its licensing efforts elsewhere in the bloc or further restrict European users' access to its services.

The European Commission's review of MiCA, informed by ESMA's consultation response, represents the next formal window for changes to the supervisory framework. Any enhancement of ESMA's direct enforcement powers over third-country firms would close a gap that non-EU entities have relied upon since the regulation fully applied from July 1.