TLDR
- Binance paused EU services after MiCA licensing issues.
- Richard Teng said 70% of EU withdrawals went to self-custody.
- Only 30% of withdrawn funds moved to MiCA-compliant platforms.
- Binance saw about $1.23B in weekly net outflows after the pause.
- Teng said self-custody flows raise questions about MiCA’s goals.
Binance CEO Richard Teng said about 70% of funds withdrawn by European users after the exchange paused services in the EU moved to self-custodied wallets, raising questions over whether MiCA rules are pushing users toward platforms with less direct oversight.
Binance EU Exit Sends Most Withdrawals to Self-Custody
Teng said only about 30% of withdrawn funds moved to MiCA-compliant regulated platforms after Binance suspended services in the European Union. The rest went to self-hosted wallets, where users control their own private keys and do not rely on a licensed exchange to hold assets.
The shift followed Binance’s withdrawal of its MiCA license application in Greece on June 24. The EU’s MiCA transition period ended on July 1, meaning crypto asset service providers needed authorization to continue serving users under the bloc’s new regulatory framework.
Binance users in the EU were required to withdraw funds after the exchange could no longer operate normally in the region. Reports said net outflows from Binance reached about $1.23 billion during the week beginning June 29, up 207% from the prior week.
Teng argued that the move toward self-custody creates a policy question for regulators. His position was that users leaving centralized exchanges for self-hosted wallets may be moving outside the type of supervision MiCA was designed to create.
MiCA Consumer Protection Goals Face Questions
MiCA was designed to set common crypto rules across the European Union, including licensing, disclosure, governance and consumer protection requirements for crypto firms. The framework gives regulators more control over exchanges and other service providers that operate inside the bloc.
Self-custodied wallets work differently because users hold their own assets directly. These wallets do not provide the same regulated exchange services, and they are not supervised in the same way as licensed crypto platforms.
That difference is central to Teng’s criticism. He suggested that forcing users off large platforms without giving them enough regulated alternatives could reduce oversight instead of increasing it.
The claim remains open to debate. Some regulators may view self-custody as a user choice, while others may see large flows into self-hosted wallets as a sign that licensing rules need smoother transition paths.
Binance Looks Beyond Europe as Rivals Gain Activity
Teng said several EU jurisdictions have invited Binance to apply for local licenses, even after the exchange paused services tied to MiCA issues. The company has not announced a full return plan for the bloc.
Competing exchanges with MiCA licenses may benefit from users seeking regulated alternatives. However, the reported withdrawal split suggests most funds did not move directly to those platforms.
As we reported, Binance has faced regulatory pressure in Europe while also expanding its focus in Asia. Teng said the company continues to grow in Asian markets as Europe’s licensing process remains difficult.
