Binance Hits EU Speed Bump: $1.23B Walks Out, 70% Straight to Self-Custody 🚪

Binance halted crypto trading services in France on July 1 after failing to secure a Markets in Crypto-Assets Regulation (MiCA) license through its planned Greek entity, forcing its roughly 2 million French users into withdrawal-only mode for spot, futures, margin, and custody products. The exchange withdrew its MiCA application in Greece on June 24, a decision co-CEO Richard Teng said "caught us by surprise because we submitted a fully compliant application. The regulators told us as much. We are not quite sure why the approval kept being delayed. We withdrew the application because otherwise our users would have faced a very short transition period." French users can still withdraw assets, and Binance stated user funds remain safe.

The post-suspension period triggered a sharp liquidity shift across Binance and its MiCA-licensed competitors. Binance recorded $1.23 billion in net outflows during the week beginning June 29, up 207% from roughly $400 million the previous week, according to DefiLlama data. Total net outflows from the exchange reached about $1.6 billion over the past month, though Binance still holds around $114 billion in crypto assets. Speaking at the Reuters NEXT Asia conference in Singapore on Thursday, Teng said Binance is now in early talks with regulators who have invited the exchange to apply for new licenses, though he declined to identify the jurisdictions and described the discussions as "premature."

Self-custody absorbed the bulk of those withdrawals, according to figures Teng cited. "Of the users in the EU [who] have subsequently withdrawn their funds out of our platform, 70% of those funds went to self-hosted wallets. Only 30% flowed to MiCA-regulated entities," Teng said, using the data to question whether MiCA is meeting its consumer protection objectives. MiCA created a single licensing framework for crypto firms across the European Union, and the European Securities and Markets Authority has said crypto firms must serve EU clients through a MiCA-authorized entity, with limited exceptions for unsolicited cross-border business.

The 30% of EU outflows that did move to regulated venues has reshuffled European exchange rankings. Per DeFiLlama data, Kraken provides about $431 million in spot liquidity across 1,703 markets, Coinbase offers nearly $347 million across 1,073 markets, and Crypto.com provides roughly $131 million. OKX added that its app downloads rose 158% between June 24 and July 5, citing Sensor Tower data.

Outside Europe, Binance is expanding its regulatory footprint in Asia. Teng said "We have deployed in many places in Asia now, from Japan to Korea to Thailand, Indonesia, Australia. We just announced the Philippines. A few more are coming." Binance reentered the Philippine market through a partnership with BlockShoals Technologies after regulators moved to restrict access to the exchange in 2024, though neither Binance nor BlockShoals is licensed by the Bangko Sentral ng Pilipinas to handle peso transfers or other central bank-regulated virtual asset services.