Binance CEO Richard Teng presented shocking statistics that call into question the effectiveness of the new European MiCA regulation. According to him, instead of bringing transparency to the market, these rules have triggered a massive exodus of funds from licensed platforms into an unregulated zone — users' personal wallets.
At the Reuters NEXT Asia summit in Singapore, Teng shared data that gives pause. Of all the funds withdrawn by users from the European Union after Binance's exit, 70% ended up in self-custody wallets. Only 30% of clients entrusted their assets to platforms that had managed to obtain a license under the new regulation.
The Regulation Paradox: Why MiCA Pushes Toward Decentralization?
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. As Teng explained, the local regulator repeatedly delayed approval without explanation. The company decided to leave on its own to avoid creating unnecessary urgency for users during a forced transition.
This process coincided with the largest weekly capital outflow from Binance in the last three years. The platform's internal statistics on the movement of these assets formed the basis of Teng's criticism.
This issue is now being discussed against the backdrop of extensive work by European regulators. Officials are actively assessing the effectiveness of the new requirements in practice. This week, a review of the regulation of custodial services under MiCA rules began. The main challenge for the industry may not be the wording of the law itself, but the specifics of its application in practice.
Self-Custody: Freedom or Risk?
Teng, who himself previously worked in regulatory bodies, voiced a significant concern. He noted that the forced migration of users to the realm of self-custody completely nullifies MiCA's protective mechanisms. Major centralized exchanges conduct strict Anti-Money Laundering (AML) and Know Your Customer (KYC) checks. In contrast, decentralized software solutions simply cannot provide such oversight.
"When funds are transferred to a personal wallet, risks only increase. There are no real AML and KYC procedures there," explained Binance Co-Executive Director Richard Teng.
According to Teng's firm belief, it is more reasonable for officials to issue licenses to large companies willing to undergo regulation. This approach is far more effective than deliberately driving crypto activity beyond the state's purview. Binance separately emphasized that the company has already received offers to submit documents in other EU countries. The brand does not plan to leave the European market permanently.
On the other hand, proponents of self-custodial crypto storage view these figures entirely 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.
Similar debates are taking place in the U.S., where developers of non-custodial wallets are asking regulators to exempt such services from requirements applied to traditional financial institutions.
Government bodies are also closely monitoring such transfers. In Europe, the requirements of the crypto "Travel Rule" are gradually tightening. As a result, exchanges are now obligated to collect detailed data on all transactions involving non-custodial wallets. It remains unclear whether the mass shift to self-custodial storage is limited to the current user outflow.
Expert Opinion: The situation demonstrates a classic conflict between regulatory goals and market reality. MiCA, designed as a tool for investor protection and anti-money laundering, paradoxically pushes users into a zone where these mechanisms do not work at all. If European regulators do not adjust their approach, we risk ending up not with a transparent market, but with an underground economy carrying even higher risks.