ESMA Drops the MiCA Hammer: Binance's EU Users May Need a New EU Address 🪪

The European Securities and Markets Authority (ESMA) is reminding crypto firms that European Union clients must be served through an entity licensed under the bloc's Markets in Crypto-Assets Regulation (MiCA), a stance that puts pressure on global exchanges to finalize their regional restructurings. "EU clients should be serviced through a MiCA-authorized entity," an ESMA spokesperson told Cointelegraph on Monday, adding that MiCA protections apply only to the legal entity that holds the EU license. Crypto asset service providers (CASPs) are required to hold MiCA authorization to serve clients across the EU and European Economic Area.

The clarification arrives just after Binance told its users it was adjusting services in Poland, France, Spain and Italy as part of its MiCA transition. Binance has said users in other countries would not need to take action if they are not based in a jurisdiction where the exchange operates through a local registered entity, telling those clients that "no action is required at this time." ESMA, however, indicated that non-EU CASPs cannot serve local customers unless they fall under the "narrow exemption" of reverse solicitation provided by Article 61 of MiCA. That article allows a non-EU crypto company to serve an EU client without a MiCA license only when the client initiates the relationship entirely on their own, without any solicitation, marketing or promotion by the company. "MiCA established that where a third-country firm solicits clients or prospective clients in the Union [...] it shall not be deemed to be a service provided on the client's own exclusive initiative," the spokesperson said.

ESMA's published guidelines on solicitation list activities that would disqualify a non-EU firm from relying on the exemption, including operating websites, mobile apps, social media, online advertising, sponsorships and influencer campaigns directed at EU users. The regulator's list of examples of third-country solicitation has been cited as a key reference point for firms mapping their EU-facing operations after the bloc's July 1 transitional deadline.

Screenshots of Binance customer support messages circulating on social media suggested that some EU users could be served through Binance's Abu Dhabi Global Market entity. Yuriy Brisov, a lawyer at Digital & Analogue Partners, said an Abu Dhabi license has no effect under MiCA because the jurisdiction is treated as a third country, alongside markets such as the United States and Singapore. "Being regulated in Abu Dhabi does nothing for Binance under MiCA," Brisov said, adding that "when Binance says some EU users are serviced through the ADGM entity, in MiCA terms that means a non-EU company is serving those users."