Binance: 70% of EU withdrawals go to self-custody after MiCA exit

After temporarily suspending services in the European Union, a large majority of Binance users are not opting for another regulated platform but instead for self-custody of their crypto. That is according to Binance co-CEO Richard Teng at the Reuters NEXT Asia conference on 9 July. The figure raises serious questions about the effectiveness of the European MiCA regulation.

70% opts for self-custody

Teng revealed that after Binance’s pause of EU services, as much as 70% of the withdrawn funds from European users end up in self-custodied wallets. Only 30% move to MiCA-compliant platforms such as Kraken, which is currently performing strongly in terms of liquidity and market coverage within the MiCA framework.

Self-hosted wallets fall outside the oversight that applies to licensed exchanges. Users who choose self-custody are therefore less protected than if they remained with a licensed provider. That is precisely the opposite of what MiCA aims to achieve.

MiCA misses its mark, says Teng

According to Teng, this pattern shows that regulation only works if users actually remain within the scope of that regulation. If the majority shifts to unregulated wallets, consumer protection misses its goal. The ESMA has meanwhile launched a major crypto custody review following the introduction of MiCA, indicating that regulators are closely monitoring the situation.

Meanwhile, Binance continues to expand its presence in Asia. Several EU member states have also invited the company to apply for a local licence. Whether and when Binance will return to the European market remains unclear for now, not least given the ongoing dispute between Binance and the US Department of Justice over future cooperation.