Binance's EU Expansion Hit A MiCA Roadblock

Binance was trying to get a MiCA license in Greece. Keyword: was.

For context, MiCA (Markets in Crypto-Assets) is the EU's crypto regulatory rulebook, so a license from any one member state can give a company the rights to operate across all 27 countries. Binance filed an application through Greece's Hellenic Capital Market Commission (HCMC) in January.

By late May, Greek officials had told Binance the application was complete and approval was coming, so the company was preparing an announcement. CEO Richard Teng was also planning to visit Athens for a photo op with Prime Minister Kyriakos Mitsotakis.

Alas, it was not meant to be.

In early June, a senior Greek regulator told Binance that European Central Bank President Christine Lagarde had personally asked Mitsotakis not to approve the application, so the company withdrew the application on the 24th, before the HCMC could formally reject it.

This bit is important because a formal rejection would have put an unsuccessful regulatory decision on the company's record. But a withdrawal is different. It's Binance pulling its own application, avoiding a formal rejection that would have been harder to shake.

Lagarde's Intervention

Binance doesn't exactly have a squeaky clean history.

According to the Wall Street Journal's reporting, Lagarde had two particular concerns:

• 2023 saw Binance plead guilty to money laundering and sanctions violations in the US, paying a massive $4.3 billion in fines. Big number. Huge. Red flag.
• The digital euro. This is the ECB's baby. Binance's scale could push the adoption of dollar-backed stablecoins in Europe, potentially undermining the digital euro.

The Catch?

The ECB has no formal authority over MiCA licensing because MiCA was designed as a decentralized licensing framework.

Under MiCA, the authority lies in each member state, hence Binance filing their application through Greece's HCMC. The ECB plays a limited role: stablecoin issuance. So, for exchange licenses like Binance's, they have no formal say. That's why the intervention is notable. It wasn't formal. It's the kind that only requires a phone at both ends of the line.

The ECB declined to comment on the Wall Street Journal's report. It's this report that broke the news. The HCMC also denied any statements from its officials regarding Lagarde's intervention.

What's Next For Binance?

Binance is now without a MiCA license, and as of mid-September, it still hasn't secured authorization in any EU country. It serves EU users through a "reverse solicitation" exemption, which allows customers to seek out unlicensed companies, rather than the company actively soliciting them.

There are 27 countries in the EU, so anything could change in the near future. We'll keep you posted.