Binance weighs new EU license options after Greece application is rejected

Binance is exploring alternative paths to secure a cryptocurrency license from another European Union member state after its application in Greece was denied. The company underscores its commitment to maintaining operations within Europe, but warns that failure to obtain the necessary authorization could jeopardize its ability to offer regulated services across all 27 EU nations.

Seeking a new licensing route

Gillian Lynch, who oversees Binance’s operations across Europe and the UK, confirmed that the company is now evaluating fresh regulatory options. Previously, Binance engaged with financial authorities in multiple countries, including Greece, Ireland, and Latvia. However, Greece was the only country where Binance formally submitted a full application under the EU’s Markets in Crypto-Assets (MiCA) regulation.

Binance management underscores its intention to continue seeking authorization through other EU member states as a means to maintain its European presence.

After the initial assessment, Binance anticipated approval from the Hellenic Capital Market Commission. However, the process resulted in a rejection ahead of the conclusion of the EU’s transitional period for MiCA. The company claims that Greek regulators did not provide detailed reasons for the denial.

Sources indicate that European financial authorities remain cautious due to Binance’s global corporate structure and its previous breaches in anti-money laundering practices. Additionally, the eligibility of senior management and the company’s internal compliance infrastructure have come under scrutiny. Binance maintains that it has significantly enhanced its oversight mechanisms and now employs approximately 1,500 compliance staff worldwide.

MiCA’s timeline increases regulatory pressure

The European Union has enacted the MiCA regulation to establish a single, harmonized framework for crypto assets across member states. This allows firms licensed in any one member country to operate throughout the bloc. However, platforms unable to secure such authorization must cease regulated European activities once transition periods expire.

Mini glossary: MiCA is the European Union’s comprehensive regulatory framework for crypto asset markets, covering common standards for licensing, issuance, custody, and investor protection.

The European Securities and Markets Authority (ESMA) has called on unauthorized platforms to scale down their operations in a prompt and orderly manner. This places pressure on Binance to secure authorization from another EU member state soon or begin the phased reduction of its regulated services in the European Union.

ESMA’s position signals that unlicensed platforms will not be permitted to continue regulated operations in the EU once transition periods end.

Past compliance matters influence decision

Reports state that regulators in Greece, Latvia, and Ireland coordinated their review of Binance’s application. Discussions focused on consistent enforcement of supervisory standards and addressing potential vulnerabilities arising from weaker oversight regimes. European regulators aim to prevent companies from relocating to countries with less stringent supervision.

Binance also faced significant legal challenges in the US in 2023. Founder Changpeng Zhao admitted to violating US anti-money laundering laws and agreed to a $4.3 billion settlement. Lynch notes that Zhao no longer participates in daily operations but holds ultimate beneficial ownership of the company.

Trading volume limited, user impact could be broader

According to CryptoQuant analyst Maartunn, euro-denominated trading pairs account for roughly 1% of Binance’s global spot trading volume. As such, the loss of a European license may not greatly affect the company’s overall trading figures. Nevertheless, the decision could significantly affect access for users in key EU countries, particularly France, Germany, and Spain.

Data show that Binance’s mobile app was downloaded over 4 million times across the EU last year, highlighting its substantial regional user base. Unless the company secures a new license from another EU country, it may be forced to gradually limit its regulated services within the European bloc.