Binance CEO Richard Teng made an unexpected statement that calls into question the effectiveness of the new European regulation. According to him, the introduction of MiCA rules has had the opposite effect: instead of strengthening control over the cryptocurrency market, the regulation has triggered a mass exodus of users to the sphere of uncontrolled asset storage.
Speaking at the Reuters NEXT Asia summit in Singapore, Teng cited telling statistics. Of all the funds that European users withdrew from Binance after the exchange left the region, as much as 70% ended up in self-custody wallets. Only 30% of clients chose to entrust their digital assets to licensed competitor platforms.
The Regulation Paradox: Why MiCA Works Against Itself
As a reminder, Binance stopped registering new clients from the EU on July 1, and at the end of June officially withdrew its application for a MiCA license in Greece. Teng explained this by saying that the local regulator systematically delayed document approval without explanation. The exchange's management preferred to leave voluntarily to avoid creating additional rush for users during a forced transition.
The situation was exacerbated by the fact that the withdrawal process coincided with the largest weekly capital outflow from Binance in the last three years. The exchange's internal statistics on the movement of these assets formed the basis of Teng's criticism.
Self-Custody Risks: A New Headache for Regulators
Teng, who has experience working in regulatory bodies, issued an important warning. He emphasized that transferring funds to personal wallets completely nullifies MiCA's protective mechanisms. Large centralized exchanges conduct strict Anti-Money Laundering (AML) and Know Your Customer (KYC) checks. Decentralized software solutions, unlike them, simply cannot provide such control.
"When funds are transferred to a personal wallet, risks only increase. There are no real AML and KYC procedures there," said Richard Teng.
In his opinion, it is much more reasonable for officials to issue licenses to large companies willing to undergo regulation. This approach is more effective than deliberately pushing crypto activity beyond the state's field of vision. At the same time, Binance emphasized that they do not plan to leave the European market forever and have already received offers to submit documents in other EU countries.
On the other hand, supporters of self-custodial storage view these numbers completely differently. Personal management of private keys allows investors to completely avoid risks associated with the sudden collapse of centralized exchanges. For many experienced users, strict control over their own money is a mandatory condition of operation, not a loophole in the law.
Meanwhile, in Europe, the requirements of the cryptocurrency "Travel Rule" are tightening. Exchanges are now required to collect detailed data on all transactions involving non-custodial wallets. It remains unclear whether the mass shift to self-custodial storage relates only to the current user outflow or is a long-term trend.
Expert opinion: The situation around MiCA is a classic example of how overly strict regulation, created for protection, can trigger the exact opposite effect. Instead of channeling cryptocurrencies into a controlled stream, European officials risk losing the market entirely by pushing assets into the "gray" zone of non-custodial solutions, where tracking them is virtually impossible. This is a worrying signal for all jurisdictions planning to introduce similar frameworks.