EU Questions Binance's Continued Operations After Business Contraction Order
EU officials are questioning Binance's continued service to customers in the region after being asked to scale back operations, focusing on whether the company is using legal exemptions to maintain operations. The Financial Times cited informed sources for this report, while Reuters noted it has not been able to independently verify the information.
The background is that MiCA requires licensed providers of regulated crypto services in the EU starting July 1, or they must cease operations in an orderly manner. Binance's application for a full EU license in Greece was not finalized before June 30, leading the company to withdraw its application and state it would pursue licenses in other member states, with France being pointed out by outsiders. Users in Poland, Italy, Spain, and France had previously received emails on how to retrieve their funds, as the company "cannot obtain a MiCA license before June 30, 2026." The European Securities and Markets Authority (ESMA) had then required unlicensed entities to immediately cease regulated activities in the EU in an orderly manner.
Three months later, Binance still does not appear on the ESMA authorization list. Bloomberg reported in early September that the company continues to operate in 27 countries through a series of loopholes. Public statements include reverse solicitation—where customers actively seek out offshore service providers, and the company can continue to provide services without advertising solicitation; some operations are handled through an Abu Dhabi entity. Tests in August showed that European accounts were still being verified seven weeks after the deadline. The euro-denominated trading volume in late August remained about 3% to 4%, roughly in line with pre-deadline levels; global spot market share remains above 45%.
Regulatory tools are intensifying. ESMA sent a letter requesting confirmation that EU operations have indeed contracted and included reverse solicitation in its regulatory priorities for 2027, which will be uniformly checked among member states: whether customers are genuinely approaching the company, as the phrase "customer initiated contact" alone does not count as evidence. Greece, Ireland, and Latvia have raised the same set of questions during the review phase: 2023 U.S. anti-money laundering and sanctions fines, complex cross-border structures, risk culture, and whether founder Changpeng Zhao can pass suitability tests. There are also reports that European Central Bank President Christine Lagarde has intervened in the Greek approval process, to which Binance responded with no comment on the rumors.
Competitors are taking a different path. Coinbase, Kraken, OKX, and others have obtained licenses; Bitpanda and OKX have stated they can take on transferred users. Of the approximately 3,000 crypto companies in the EU, only about 210 have been approved on time. Gillian Lynch, head of Binance's European and UK operations, stated after withdrawing the Greek application that "Binance is not leaving Europe," but is simply changing its licensing path.
In market mechanisms, the sellers are unlicensed global exchanges wanting to retain eurozone traffic, while the buyers are EU users required to prove "customers are approaching them" and existing accounts that have not yet completed migration. There has been no forced liquidation of funds; rather, new accounts, new deposits, and regulated products related to earning coins are restricted, with spot market share maintained through existing users and reverse solicitation. Beneficiaries are exchanges that hold MiCA licenses and can publicly acquire customers; those under pressure are Binance's compliance narrative in the EU and regulators writing the "business cessation order" as an enforceable ban. This matter is driven by regulatory inquiries, not on-chain settlements or runs.
Supplementary aspect: Binance admitted to violating anti-money laundering regulations in the U.S. in 2023 and paid over $4.3 billion in fines; the UK has restricted its services since 2021, and France has previously investigated its anti-money laundering issues. These historical records have been repeatedly cited as reasons for the current rejection and inquiries, rather than new trading data.
Source: Public Information
ABAB AI Insight
Binance's strategy of "one country application, all EU access" faced obstacles in Greece due to suitability issues and historical fines, prompting a shift to France while simultaneously using its Abu Dhabi entity and reverse solicitation to retain customers. This mirrors the narrative shift to Abu Dhabi after the company pleaded guilty and paid fines in the U.S. in 2023: unable to obtain a license, it framed user relationships as offshore orders initiated by clients. Gillian Lynch's public statement of not leaving Europe effectively interprets the cessation order as a transitional phase.
Capital has not significantly exited the euro order book, as the 3% to 4% euro trading volume indicates that existing users are still placing orders. What has truly been cut off is the growth pipeline for advertising customer acquisition. Coinbase, Kraken, and OKX are harvesting publicly acquired customers with compliant licenses, while Bitpanda is taking on transfers; Binance retains 45% of the global spot market share, subsidizing this gray stock with non-EU liquidity.
This is similar to the UK shutting down Binance's retail entry in 2021, after which the company used other entities to serve customers who approached them. The industry is in a control period from MiCA's legislation to enforcement: 210 licenses for 3,000 companies, with the unified market first filtering out the largest unlicensed players.
Structural judgment belongs to regulatory changes. Reverse solicitation, originally a narrow exemption in cross-border finance, has become the main channel for unlicensed operations, with regulators turning "who speaks first" into a check item for 2027. The mechanism is: unified licensing consolidates customer acquisition rights to licensed entities; whoever can prove customers came without solicitation can continue to serve existing users within the ban's gaps. The ban was written on July 1, and its enforceability depends on whether ESMA turns that confirmation letter into a punishable factual determination.
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- The cessation order governs customer acquisition, not existing orders.
- Reverse solicitation is an exemption, not a new license.
- The unified market first eliminates the largest unlicensed entry.