Binance CEO Richard Teng stated that the implementation of the European MiCA regulation has led to a paradoxical outcome. Instead of strengthening control over the crypto market, the new rules have triggered a mass exodus of users to the sphere of non-custodial asset storage. According to him, this nullifies all regulatory efforts.
Speaking at the Reuters NEXT Asia summit in Singapore, Teng cited telling statistics. Of all the funds that European Binance clients withdrew from the exchange after its decision to leave the EU market, as much as 70% ended up in personal wallets. Only 30% were transferred to licensed competitor platforms.
As a reminder, Binance stopped registering new users from the EU on July 1. And at the end of June, the company officially withdrew its application for a MiCA license in Greece, citing unexplained delays by the local regulator. Management decided to leave voluntarily to avoid creating a force majeure situation for clients.
As a result of these events, the exchange experienced its largest weekly capital outflow in three years. It is this data that formed the basis of Teng's criticism. He emphasizes that transferring funds to personal wallets completely nullifies the protective mechanisms built into MiCA. Large centralized exchanges conduct strict AML and KYC checks, while decentralized solutions 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," Teng explained.
In his firm belief, it would be wiser for officials to issue licenses to large companies willing to undergo regulation. This approach is much more effective than deliberately pushing crypto activity beyond the state's field of vision. Binance separately emphasized that the brand does not plan to leave the European market forever and has already received offers to submit documents in other EU countries.
On the other hand, proponents of self-custodial storage view these figures 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 US, where developers of non-custodial wallets are asking regulators to exempt them from requirements applicable to traditional financial institutions. Government agencies are also closely monitoring such transfers. In Europe, the requirements of the crypto "Travel rule" are being tightened, obliging exchanges to collect detailed data on all transactions involving non-custodial wallets.
Expert opinion: The situation described by Teng is a classic example of a regulatory paradox. Overly strict and inflexible rules, instead of bringing the market under control, only push it into the gray zone. MiCA is certainly an important step, but its practical application has already revealed serious flaws. European authorities will have to reconsider their approach, otherwise they risk losing the entire digital asset market, not just a part of it.