Binance CEO Richard Teng presented unexpected data that calls into question the effectiveness of the new European MiCA regulations. Contrary to regulators' expectations, after the largest exchange left the EU market, users did not switch to licensed alternatives but instead preferred to withdraw funds to personal wallets. According to Teng, this trend completely nullifies the protective mechanisms embedded in the regulation.
During his speech at the Reuters NEXT Asia summit in Singapore, Richard Teng shared critical statistics. It turned out that of all the funds withdrawn by users from the European Union, as much as 70% ended up in non-custodial wallets. Only 30% of clients entrusted their digital assets to platforms that had managed to obtain a license under the new regulation. This is direct evidence that the regulation, designed to strengthen control, has had the opposite effect—driving assets into the "gray" zone.
Why Binance left and users did not turn to competitors
As a reminder, Binance stopped registering new clients from the EU on July 1, and shortly before that, it withdrew its application for a MiCA license in Greece. As Teng explained, the local regulator repeatedly delayed document approval without explanation. The exchange's management decided to leave on its own to avoid creating unnecessary rush for users during a forced transition. However, as practice has shown, most clients did not switch to other centralized platforms.
This 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. He emphasizes that European officials are now actively assessing the effectiveness of the new requirements in practice. For example, 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.
Risks of self-custody: expert opinion
Richard Teng, who has experience working in regulatory bodies, expressed an important concern. He noted that the forced migration of users to self-custody completely nullifies MiCA's protective mechanisms. Large centralized exchanges conduct strict anti-money laundering (AML) and know-your-customer (KYC) checks. In contrast, decentralized software solutions simply cannot provide such control.
"When funds are transferred to a personal wallet, the risks only increase. There are no real AML and KYC procedures there," explained Binance co-CEO Richard Teng.
According to Teng's firm belief, it would be more reasonable for officials to issue licenses to large companies willing to undergo regulation. This approach is far more effective than deliberately pushing crypto activity beyond the state's oversight. 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.
My analysis: The situation clearly demonstrates the fundamental conflict between regulators' desire for total control and the decentralized nature of cryptocurrencies. Forced regulation without considering market realities and user convenience could lead not to legalization, but to the "underground" growth of the market. European authorities should reconsider their approach to licensing; otherwise, MiCA risks becoming not a protective tool, but a driver of mass migration to self-custody, where state control is virtually impossible.