Crypto exchange Binance: Binance Holdings Ltd., the world’s largest crypto exchange, was about to get kicked out of the European Union.
Binance had failed to get a key regulatory license — an outcome that was not entirely surprising — but now, months after it was set to leave the EU, the company is still doing business there. That’s due to a medley of side doors and workarounds that have allowed the firm to express confidence about continuing to operate in the 27-member-state bloc, according to people familiar with the matter.
A few crucial factors are emboldening Binance to maintain customers in the EU, where its licensing issue has so far been more of a barrier than a blockade, the people said.
One is a provision that lets unlicensed crypto firms bring in customers who sign up of their own accord, rather than through a marketing campaign. Binance has interpreted this “reverse solicitation” clause as something that means it can onboard new customers across the region, the people said.
Binance has also been routing trading for some of its EU-based customers to an entity in Abu Dhabi, which is governed differently, said the people, who were not authorized to speak publicly.
Altogether, it paints a portrait of a new regulatory regime — known as Markets in Crypto-Assets, or MiCA — that was intended to regulate crypto firms across the region in a uniform way, but has so far not been effective in ejecting the largest and most prominent unlicensed exchange.
“The fact that they did not obtain the license does not necessarily mean that they need to close all accounts they have for European customers,“ said Nina-Luisa Siedler, a lecturer at the Berlin University of Applied Sciences who advises companies on compliance with MiCA.
In a statement, Binance said it adheres to regulations in any jurisdiction where it operates, and that it is committed to doing business in the EU on a “long-term, compliant basis” under MiCA or otherwise.
“We are actively working toward becoming MiCA-authorised and view this as an important step in providing users with a consistent, regulated, and trusted service across the European market,” the company said.
For Binance, MiCA represents the latest in a series of regulatory and legal ordeals for a beleaguered crypto company.
The exchange agreed to a $4.3 billion settlement with the US government in 2023 as its co-founder, Changpeng Zhao reached a parallel settlement that involved a prison stint. He was pardoned last year by President Donald Trump.
Binance has tried to project that its regulatory woes are in the past, but new issues keep surfacing. That includes recent media reports that it helped funnel $1 billion to Iran, which the company has repeatedly denied. Then last month, Binance had to answer questions about police interactions with employees in the United Arab Emirates over issues involving a bank account it used to hold customer money.
Binance’s EU ouster was expected as a July 1 MiCA licensing deadline approached. The company had announced its intention to exit the bloc weeks earlier. However, behind the scenes, European Central Bank President Christine Lagarde personally intervened to ensure Binance’s application would not be approved, some of the people familiar with the matter said.
Under MiCA rules, national regulators are responsible for awarding EU-wide licenses.
Binance withdrew its application on June 16, the day before the Hellenic Capital Market Commission planned to discuss it at a board meeting and “therefore, no decision was made by the HCMC board,” the Commission said in a statement.
