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

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.

She said Binance expected authorization in early June after being told in April that its application was complete. Instead, board meetings were repeatedly postponed before the company decided to withdraw its application.

“We were deemed to have a complete application,” Lynch said. “Nothing was missing, nothing material was outstanding.”

Lynch, who spent nearly two decades in traditional banking and financial services before joining crypto, said she understands what regulators expect from licensed financial institutions. She said Binance has invested more than $300 million a year in compliance, employs more than 1,500 compliance staff globally and spent months working with Greece’s Hellenic Capital Market Commission (HCMC) on its MiCA application.

The HCMC did not immediately respond to a CoinDesk request for comment regarding Binance’s MiCA licensing process.

“As the person who led the license application, there’s nothing that I have been made aware of that there was any issue with the application,” Lynch added. “In fact, I was told the complete opposite.”

Lynch also argued that Europe’s crypto market loses more than just its largest exchange if Binance remains outside the MiCA framework. She said Binance provides liquidity and market infrastructure that benefit the wider crypto ecosystem, adding that regulation should strengthen the industry rather than exclude companies that have invested heavily to meet its standards.

Lynch declined to speculate on reports that political intervention played a role in the delays. Instead, she said the focus is now on helping users through the transition period while preparing a new licensing strategy.

“We’re very committed to being in Europe and very committed to being regulated,” she said.

Despite Binance’s experience, Lynch described MiCA as a positive step for the industry. She said the regulation has helped bring crypto into the financial services system by providing firms with clear rules and consumers with greater protection.

“I fundamentally believe the crypto industry is maturing. Regulation brings maturity,” she said. “The industry is here to stay, and it’s part of the financial services ecosystem.”

For now, she said, Binance’s priority is helping customers through the transition period before pursuing a new licensing strategy.

“We’re not leaving Europe,” Lynch said. “This is an obstacle in our way at the moment. We fundamentally believe that we can be regulated and we will be back in the market.”