ESMA MiCA warning puts Binance EU service changes under scrutiny

An ESMA spokesperson emphasized that EU clients should be serviced through a MiCA-authorized entity, and that MiCA protections only apply to such licensed entities. This guidance comes as Binance announced it is adjusting its services in several EU countries, including Poland, France, Spain, and Italy, as part of its transition to comply with MiCA.

ESMA also highlighted a "narrow exemption" under Article 61 of MiCA, known as reverse solicitation, which allows non-EU CASPs to serve EU clients only if the client initiates the relationship entirely on their own, without any solicitation, marketing, or promotion from the company. The regulator made it clear that this exemption does not apply if a third-country company solicits clients in the EU, citing activities like operating websites, apps, social media, online advertising, sponsorships, and influencer campaigns targeting EU users as examples of solicitation.

Questions have arisen regarding Binance's servicing model, with screenshots circulating on social media suggesting that some EU users might be serviced through Binance's Abu Dhabi Global Market (ADGM) entity. Lawyer Yuriy Brisov of Digital & Analogue Partners stated that an ADGM license has no bearing under MiCA, as the jurisdiction is treated as a third country. Brisov argued that the reverse solicitation exemption is intended for isolated cases and not for maintaining an existing customer base built through marketing efforts.