Binance CEO Richard Teng presented an unexpected perspective on the consequences of implementing the European MiCA regulation. According to his data, instead of strengthening market control, the new rules have had the opposite effect: a mass exodus of users to the realm of unregulated self-custodial storage.
Speaking at the Reuters NEXT Asia summit in Singapore, Teng shared telling statistics. Of all the funds that Binance clients withdrew from the European Union after the exchange's departure, a full 70% ended up in personal wallets. Only 30% of users entrusted their digital assets to platforms that had managed to obtain a license under the new regulation.
As a reminder, Binance stopped registering new clients from the EU on July 1. And at the end of June, the company officially withdrew its application for a MiCA license in Greece. As Teng explained, the local regulator repeatedly delayed document approval without explanation. Management decided to leave voluntarily to avoid creating unnecessary rush for users during a forced transition.
Irony of Fate: Protection That Creates Risks
Teng, who has experience working in regulatory bodies, noted a key paradox. The forced migration of users to self-custody completely nullifies the protective mechanisms that were built into MiCA. Large centralized exchanges conduct rigorous anti-money laundering (AML) and know-your-customer (KYC) checks. Decentralized software solutions, in his words, 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," said the Binance co-executive director.
According to Teng's firm belief, it is much more sensible for officials to issue licenses to large companies willing to undergo regulation. This approach is more effective than the fictional squeezing of crypto activity beyond the state's field of vision. Binance separately emphasized that the company has already received offers to submit documents in other EU countries and does not plan to leave the European market permanently.
This issue is currently being discussed against the backdrop of extensive work by European regulators. 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.
Cryptalist Analysis: This situation is a classic example of a "regulatory trap." In an effort to establish order, European authorities are effectively pushing users into the unregulated sector, where transaction control becomes impossible. The irony is that MiCA, designed to protect investors, may in the short term make them more vulnerable. The question is whether European officials will learn to adapt their requirements to the reality of decentralized finance, or whether we will witness further market fragmentation.