Binance CEO Warns MiCA Regulation Is Backfiring, Driving EU Users to Self-Custody

Binance CEO Richard Teng has publicly criticized the European Union’s Markets in Crypto-Assets (MiCA) regulation, arguing that the landmark legal framework is producing the opposite of its intended effect. Speaking at the Reuters Next Asia Summit in Singapore, Teng stated that since MiCA’s implementation, the majority of departing users are moving their funds to self-custody wallets rather than to platforms holding MiCA licenses.

MiCA’s Unintended Consequences

Teng’s comments highlight a growing concern within the industry: that strict regulatory requirements may be pushing users away from compliant, transparent platforms and toward less regulated, self-directed storage methods. He emphasized that regulated exchanges operate with robust anti-money laundering (AML) and know-your-customer (KYC) procedures, while self-custody wallets inherently lack such oversight. This trend, he argued, directly undermines the law’s original intent of protecting consumers and ensuring market integrity.

“It would be better for regulators to focus on licensing compliant companies rather than creating conditions that drive users into unregulated spaces,” Teng said during the summit, according to reports from BeInCrypto.

Binance’s Strategic Response

The criticism comes amid Binance’s own strategic adjustments in the European market. The exchange withdrew its MiCA license application in Greece and, as of July 1, suspended services for new EU customers. These moves signal a recalibration of Binance’s approach to the region, as the company navigates a complex patchwork of national and EU-wide regulations.

While Binance has not disclosed the total number of users affected, the shift toward self-custody raises significant questions for regulators. If a substantial portion of crypto activity moves beyond the reach of licensed exchanges, the transparency gains promised by MiCA could be significantly diminished.

What This Means for the Crypto Industry

MiCA, which came into full effect earlier this year, was designed to create a unified regulatory framework for crypto assets across the EU. It mandates strict licensing, disclosure, and consumer protection requirements for exchanges and custodians. However, Teng’s remarks suggest that the regulation may inadvertently incentivize users to bypass these safeguards entirely.

Industry analysts point out that self-custody wallets, while offering users full control over their assets, also present heightened risks of loss, theft, and lack of recourse in the event of disputes. The tension between regulatory oversight and user autonomy remains a central challenge for policymakers worldwide.

Conclusion

Richard Teng’s critique of MiCA adds a high-profile voice to the ongoing debate over how best to regulate digital assets. Whether EU regulators will respond by adjusting the framework or doubling down on enforcement remains to be seen. For now, the trend toward self-custody in Europe underscores a fundamental friction: rules designed to protect users may, in practice, push them toward greater risk.

FAQs

Q1: What is MiCA regulation?
MiCA (Markets in Crypto-Assets) is the European Union’s comprehensive regulatory framework for crypto assets, covering licensing, consumer protection, and market integrity for exchanges and custodians.

Q2: Why does Binance CEO say MiCA is backfiring?
Richard Teng argues that MiCA is driving users away from regulated exchanges—which have AML and KYC checks—toward unregulated self-custody wallets, undermining the law’s protective intent.

Q3: Has Binance withdrawn from Europe?
Binance withdrew its MiCA license application in Greece and stopped onboarding new EU customers as of July 1, but it continues to serve existing users in the region through other entities.