Binance Ordered to Wind Down EU Operations
Binance has been ordered to wind down its European Union business after failing to obtain a required license. Under the applicable rules, unlicensed crypto firms were required to take “immediate steps” to wind down operations from July 1 and stop serving customers, except where necessary to help them transfer or sell their holdings.
In June, Binance said it had worked with regulators for approximately 18 months and had received no formal indication that its application would be rejected. The exchange later withdrew its authorization application in Greece and said it would seek approval in another EU member state.
Christine Lagarde Reportedly Opposed Binance’s Greek Application
A separate Wall Street Journal report alleged that European Central Bank President Christine Lagarde personally asked Greek Prime Minister Kyriakos Mitsotakis to block Binance’s application. The request reportedly came after Greek regulators had nearly approved the exchange.
By early June, Binance’s application had passed its technical review, and the mandatory 40-day assessment period had concluded without objections. The reported concerns were linked to Binance’s earlier guilty plea in the United States over money-laundering and sanctions violations. They also reportedly involved fears that approving Binance could encourage greater use of dollar-denominated stablecoins while the ECB is developing a digital euro.
ESMA Seeks Stronger MiCA Enforcement Powers
The developments surrounding Binance came as the European Securities and Markets Authority called for national regulators to receive broader powers to enforce the Markets in Crypto-Assets Regulation, known as MiCA.
According to Reuters, ESMA wants the authority to order crypto companies to freeze assets when there are reasonable grounds to suspect links to criminal activity. The regulator argued that existing procedures can be so slow that suspicious assets may have disappeared by the time a freeze is requested.
ESMA also proposed allowing national authorities to remove websites connected to scams or unauthorized crypto firms. Regulators could additionally take action against companies based outside the EU that actively solicit EU investors without authorization.
The proposals include a possible ban on certain misleading marketing practices, new requirements covering third-party marketing, and rules requiring crypto firms to provide customers with full cost information. ESMA submitted the proposals as part of its response to a consultation on MiCA, which is currently under review.
Why This Matters
The Binance case highlights the challenges facing the EU as it applies a single regulatory framework to crypto markets while relying heavily on national authorities for enforcement. The reported dispute over Binance’s Greek application also illustrates how licensing decisions can intersect with concerns about financial crime, stablecoin use and the ECB’s digital euro plans.
ESMA’s proposals indicate that European regulators are seeking faster and more consistent tools to respond to unauthorized activity. A group of European central banks published its own response to the MiCA consultation the previous week, while Reuters reported that some regulators have raised concerns about diverging approaches and uneven enforcement across the bloc.
Frequently Asked Questions
Why was Binance ordered to wind down its EU business?
Binance failed to secure a required license. Under the rules, unlicensed firms had to begin winding down from July 1 and stop serving customers, except to assist with transferring or selling their holdings.
What happened to Binance’s application in Greece?
Binance withdrew its Greek application after previously saying it had worked with regulators for about 18 months without receiving a formal rejection. A Wall Street Journal report alleged that Christine Lagarde asked Kyriakos Mitsotakis to block the application.
What enforcement powers does ESMA want?
ESMA has proposed powers to freeze assets suspected of being linked to crime, remove websites associated with scams or unauthorized firms, and act against non-EU companies that solicit EU investors without authorization. It also wants stricter rules for marketing and customer cost disclosures.
