Binance says MiCA should be judged by who it licenses, not who it excludes

The head of crypto exchange Binance's Europe division said the success of the European Union’s Markets in Crypto-Assets (MiCA) regulation should be measured by how many firms it brings into the regulatory system, not simply by having a rulebook.

The world's largest crypto exchange withdrew its MiCA license application in Greece last week after months of discussions with regulators, forcing it to notify affected users less than 10 days before the July 1 deadline, instead of the 30 days they internally contemplate. Binance told its clients, via an email to users in several EU countries, that it would suspend some services and would no longer accept new registrations until further notice.

Although Binance still believes MiCA can become the global standard for crypto, Gillian Lynch, Binance's head of Europe and the U.K. in an interview said the regime's success should be measured by how many firms it brings inside the regulated market.

"Is the success of MiCA that we have regulation, or is the success that the players are regulated?" Lynch said.

Despite the Greek withdrawal, she said she supports MiCA remaining a system in which national regulators grant licenses, while the European Securities and Markets Authority (ESMA) plays a larger supervisory role over the largest firms. Binance is not the only crypto exchange suspending crypto services by July 1.

ESMA privately advised national regulators to disapprove Binance’s MiCA applications, highlighting issues the exchange has meeting compliance with financial-crime rules, the Wall Street Journal reported on Wednesday, citing people familiar with the discussions.

Lynch said the WSJ’s reporting “mischaracterises how these accounts were identified, reviewed and acted upon. With regards to the cases raised in recent reporting, as soon as Binance uncovered these complex patterns of activity, it offboarded all accounts involved in those transactions and reported them to law enforcement. This is the complete picture that the headlines omitted.”

Lynch disputed the report, saying it "mischaracterises how these accounts were identified, reviewed and acted upon." She also said the accounts referenced were offboarded and reported to law enforcement as soon as Binance identified the activity, adding that "this is the complete picture that the headlines omitted."

She also rejected suggestions that Binance ignored sanctions concerns or retaliated against compliance staff, calling such allegations "categorically false." Binance previously sued the WSJ over reporting on these Iran-linked accounts from earlier in the year.

Of the roughly 3,000 registered virtual asset service providers (VASPs) operating in the EU, almost 80% of the crypto players may not survive after MiCA, according to Erald Ghoos, CEO of OKX Europe.

And as a consequence of the hundreds of crypto service providers facing suspensions, over 10 million users will now have to migrate to a MiCA-approved platform, Alex Fazel of Swissborg told CoinDesk.

Lynch said she expects Binance's next licensing application not to take long, as the company has already completed much of the regulatory process during its application with the Greek authorities.