MiCA reshuffle begins, Binance temporarily bids farewell to the EU

Author: Chloe, ChainCatcher

On July 1, 2026, the transition period of the EU's Markets in Crypto-Assets Regulation (MiCA) officially ended. Institutions that obtained licenses received the "EU passport" to operate throughout the single market, while those that did not must exit. Binance, having failed to obtain a license, notified users on June 26 that it would cease services in the EU market.

Binance stated, "We are not leaving Europe," assuring that assets are secure and accessible at any time, but they are reapplying for a license in France. However, in practice, this is a shutdown: starting July 1, new registrations, deposits, spot orders, and financial products such as Earn, staking, and Launchpool will be halted for EU residents, leaving only withdrawals.

Binance suffered a significant setback in front of MiCA; how will the remaining competitors divide Binance's existing EU users? Looking back at Binance's compliance journey over the past three years: as the benefits of regulatory arbitrage gradually diminish, what has this giant, which grew in a regulatory vacuum, managed to complete, and what remains unaddressed?

The Battle for Binance Users

In the past, exchanges competed for users by quietly adjusting fees and listing new coins. This time is different; following Binance's defeat, competitors launched their subsidy wars almost immediately: Coinbase CEO Armstrong offered a 5% transfer bonus, while OKX's Xu Mingxing increased it to 8%, both highlighting "We have a MiCA license" as their selling point. Even second-tier players joined in, with SwissBorg offering a 3% deposit bonus, limited to funds transferred from non-MiCA platforms.

In response to this user acquisition battle, CZ posted on X, stating that the EU has "cut off the best liquidity in the world," hoping for a turnaround in the future.

The aggressive competition for users is due to the high elimination rate of MiCA: of over 3,000 crypto institutions operating in Europe, only about 210 had obtained full authorization by July 1, resulting in a pass rate of approximately 7%. Licenses are highly concentrated in a few jurisdictions, with Germany leading with 56 licenses, followed by the Netherlands with 26, France with 21, and Malta, Cyprus, and Ireland each having around ten.

OKX's European CEO Erald Ghoos estimates that about 80% of exchanges will not survive MiCA, and as of a few days ago, around 60% of European users remained on non-MiCA platforms. In other words, Binance's exit leaves not just scattered retail investors but a whole batch of high-value users forced to move, with almost nowhere to go.

From market share data, Binance's loss of users actually began before MiCA. According to Coingecko's 2025 annual report, it still held a 39.2% share of the trading volume among the top ten centralized exchanges, driving a total trading volume of $7.3 trillion for the year, but with a year-on-year growth rate of -0.5%. By the end of 2025, the trend became more evident, with Binance's spot market share at 38.3% in December, but trading volume plummeting 40.6% from November's $609 billion to $361.8 billion.

By early 2026, this trend fluctuated even more: according to CoinDesk data, Binance's market share fell to 22.0% in February, the lowest since October 2020, while OKX's derivatives market share climbed to 18.3%. However, according to CoinMarketCap data, by April 2026, Binance's spot and derivatives market shares showed some recovery, with derivatives rising to 36.25%.

Faced with high market volatility, the EU's decision effectively pushed existing chips directly onto competitors' tables. The real trouble is that once users complete identity verification and deposits elsewhere, even if Binance offers better features and lower fees in the future, they may not return.

Review One: The Largest Fine in History

To understand why Binance faced obstacles in the EU, we must return to its first critical juncture.

On November 21, 2023, Binance reached a historic settlement with the U.S. over anti-money laundering violations, totaling over $4.3 billion. The Financial Crimes Enforcement Network (FinCEN) imposed a civil fine of $3.4 billion, the highest in its history, along with a five-year monitoring period. The Office of Foreign Assets Control (OFAC) imposed an additional fine of approximately $968 million. Founder Changpeng Zhao pleaded guilty, paying a $50 million fine and stepping down, while a $150 million fine owed to the Commodity Futures Trading Commission (CFTC) was reduced to $100 million. Former compliance officer Samuel Lim was also fined $1.5 million.

The severity of the fines stemmed from the core issue not being the absence of a compliance department, but rather that it existed yet had never submitted any suspicious activity reports (SARs) to FinCEN. Over 100,000 suspicious transactions went unreported, involving terrorist organizations, ransomware, child sexual exploitation content, and various scams, with KYC data only being collected starting in May 2022. Regarding sanctions, OFAC identified 1,667,153 transactions suspected of violating sanctions between August 2017 and October 2022. During this period, Binance collected approximately $1.35 billion in trading fees from U.S. users alone.

Review Two: A Costly Shift

However, starting at the end of 2023, Binance did initiate a costly compliance shift.

The first step was changing the CEO; CZ stepped down, and Richard Teng, who has over twenty years of financial and regulatory experience and previously worked at Abu Dhabi Global Market and the Monetary Authority of Singapore, took over as the new CEO. Subsequently, Binance expanded its full-time compliance team by 34%, aiming to reach 645 employees by the end of 2024. Including contract staff, the number of compliance-related employees exceeded 1,000. Compliance expenditures increased by 36% starting in 2023, with hires from traditional finance and government agencies, including Todd McElduff from PayPal and Morgan Stanley, and Tigran Gambaryan, a former financial crime expert from the IRS.

By early 2026, Binance had over 580 dedicated compliance personnel, plus 970 compliance-related staff dispersed across customer service, technology, and product departments, totaling over 1,500. In 2025 alone, Binance responded to over 71,000 law enforcement requests, assisting in the seizure of over $130 million in illegal funds.

The second step was changing the battlefield. After being heavily fined by the U.S., Binance shifted its expansion focus to regions with clear regulations, adopting a "license first, operate later" strategy. It announced plans to expand its licensed jurisdictions to over 20 by 2025, having already obtained licenses in Australia, India, Indonesia, Japan, New Zealand, and Thailand, and added another license by acquiring a stake in South Korea's Gopax. Its subsidiary became the first exchange to obtain a full VASP license from Dubai's VARA as early as 2024. Binance established regional headquarters in Dubai, Paris, and Singapore, gradually dismantling its previously ambiguous "global without entity" structure into legally regulated entities.

Review Three: Politically "Untangled" in the U.S., but Hitting a Hard Wall in the EU

If we only look at the U.S. line, Binance's compliance efforts have successfully untangled the situation. The SEC withdrew its civil lawsuit against Binance in May; on October 23, 2025, Trump directly pardoned CZ, who had actually completed a four-month prison term and was released in September 2024. However, this pardon came with controversies over interests: Binance managed the Trump family's crypto project, World Liberty Financial, which was a key driver of the growth of its stablecoin USD1. Earlier this year, it accepted a $2 billion investment from the UAE through USD1, but Binance and CZ denied any business relationship.

Internal data reviewed by the Financial Times shows that after the settlement, Binance still had $144 million in suspicious transactions, including one Venezuelan resident's account that processed $93 million between 2021 and 2025, despite system alerts, the account continued to operate normally. For regulators, such data would be a primary basis for their decisions. Regulatory bodies in Greece, Ireland, and Latvia have all expressed concerns about Binance's past legal issues and corporate structure. However, Binance emphasizes that it has been "constructively cooperating with regulators for 18 months," obtaining passes from Asia and the Middle East, but the EU remains a barrier where 18 months of goodwill, a team of 1,500 people, and billions of dollars in investment still did not yield a license.

The Real Change is Not Just a License

So how should we view Binance's recent defeat? Its compliance investments over the past three years are real, but the historical burdens that cannot be washed away are also undeniable. What is worth tracking is not whether it can regain the license in France after the deadline, but whether this company can deliver product strength, governance capability, and trust foundation commensurate with its scale after the benefits of regulatory arbitrage have disappeared.

According to CryptoQuant data, Binance still dominates cryptocurrency spot trading volume with a 32% market share in 2026. Whether the updates to MiCA (Markets in Crypto-Assets Regulation) will shake its leading position remains to be seen.

MiCA reshuffles the European crypto market landscape; it is not just an individual disaster for a single exchange but an engine for redistributing funds: users, fees, and attention are flowing to those players who can quickly align rules and products. For Binance, the door to the EU may eventually reopen, but by the time it returns, the funds and users in the market will no longer resemble what they were when it left.