BENGALURU: EU officials are questioning Binance over its use of a legal exemption to continue serving customers in the region despite an order to wind down its business in the bloc, the Financial Times (FT)reported yesterday, citing people familiar with the matter.
Binance, the world’s largest cryptocurrency exchange, lost permission to offer services to European Union (EU)clients after its application under a new licence regime was rejected earlier this year, threatening access for millions of users.
Under new EU rules, called Markets in Crypto-Assets, crypto companies were required to obtain a licence by the end of June to continue operating across the bloc. Without a licence, Binance would not qualify to continue operating in the EU from July.
The European Securities and Markets Authority and national regulators are looking into Binance’s use of “reverse solicitation”, a legal exemption allowing companies based outside the EU to provide financial services to customers in the bloc if those users seek the relationship entirely on their own initiative, the FT reported.
“The reverse solicitation exemption should be understood as very narrowly framed. It should be regarded as the exception and not be used to circumvent MiCA requirements,“ ESMA told the FT.
Some regulators have requested information from the company and could take enforcement action, including imposing fines, if they are not satisfied with Binance’s response, the report said. – Reuters
