Binance clashes with European regulation and will cease to operate on July 1

BarcelonaBinance, the world's largest cryptocurrency exchange platform, has hit the wall of European regulation. As the Reuters agency had already reported, the company will not receive permission to operate under the European crypto-asset law, MiCA, before the transition period ends on June 30. The company founded by Changpeng Zhao, it should be remembered, sought to obtain regulatory clearance in Greece, where market sources assure that it expected to find institutions "more lenient" in their application of the European directive.

Binance is the largest cryptocurrency platform on the market, concentrating more or less half a million users in Spain alone. In total, around 300 million people use its services, more than 40 million within the European Union alone. Once the deadline to obtain the European license expires, which had been established since the approval of the MiCA regulation in 2024, traders will have no other alternative but to withdraw their assets from Binance and transfer them to one of the funds that do have the regulatory approval of Brussels, such as Kraken or Crypto.com. The consultant specialized in the crypto sector Albert Salvany, in fact, expects the customer exodus to be significant. In conversation with ARA, the expert warns that users "are very angry with Binance for not having taken care of its operation" in Europe. On the contrary, its competitors, already in full compliance with regulation, "will sell peace of mind".

According to Binance executives, they have not given up yet and will seek alternatives to resume their operations in Europe as soon as possible. In a statement, the platform assured that "ambitions to operate under a clear, fair and harmonized MiCA framework have not ended." To return to European operations, they will continue "working to obtain authorization from another member state in the coming months." According to Reuters information, it should be noted, the management had already sought contacts with other regulatory bodies that could be favorable to their cause, such as the Irish or Latvian ones. Nevertheless, they were met with little enthusiasm.

Clashes with the regulator

Binance's is a particularly complex regulation due to both the volume and the diversity of financial products offered by the platform. According to Salvany, the company "is not just a usual exchange: it is an entire marketof financial products – investment, staking– which makes regulation much more difficult". In conversation with the newspaper ARA, Salvany acknowledges that the MiCA regulation is "particularly restrictive in certain areas", although he points to the company's planning as responsible for the European defeat. "The law did not appear yesterday nor has it been applied suddenly. The transition period is ending", states the expert.

Salvany looks at Binance's North American experience to foresee the next steps it will have to take in Europe. In the United States, the platform was embroiled in a scandal for various accounts linked to terrorist organizations such as Al-Qaeda or the Islamic State. Then, it had to reach an agreement with the authorities for about 4.3 billion dollars, in a case that ended with its founder serving a four-month prison sentence. The European suffering, according to the sector, is going down the same path: authorities lament the platform's lack of transparency in capital tracking.

The expert, in this regard, sees it as "impossible" for Binance to be operational in Europe on the 30th, when the deadline for applying the MiCA regulation ends. "The negotiation will be complicated, because the current regulation is there for everyone", he maintains. In his opinion, the platform will have to modify some products, especially those that do not guarantee complete tracking of assets moving through the exchange. However, some others "are difficult to modify", and it would not be ruled out that they end up segregating them into subsidiaries that do not operate in Europe, according to Salvany's assessment, to prevent Community regulations from applying to them.

"Without exceptions"

Community regulators have already indicated to Binance that it will not be easy to obtain a license without a substantial change in its activity. As Salvany recalls, countries like France, Germany or Spain have been particularly strict in the literal application of MiCA regulations. The president of the National Securities Market Commission, Carlos San Basilio, clarified the Spanish position this very Friday in his intervention at the seminar organized by the Association of Journalists of Economic Information in Santander: "There will be no exceptions or extensions" regarding the crypto-assets law.

In this regard, he has urged unauthorized platforms, such as Binance, to "stop their activity in the most orderly way possible." "Those who are not registered cannot attract new clients, nor carry out commercialization or marketing operations," he warned. Salvany, following this offensive by the stock market regulator, anticipates that there will be "pressure" from national authorities on ESMA, the European stock market regulator, to monitor any relationship of a national authority with Binance. "No one will want to grant it permission to operate in the short term, because it will be under Brussels' microscope," concluded the consultant.