Binance missed out on MiCA: Should Web3 projects still be forced to stay in Europe?

Author: Shao Jiadian

The real question for Web3 projects isn't how to obtain MiCA, but whether the European market is worth the heavy compliance costs.

From late June to early July, Binance, having failed to obtain CASP authorization before the end of the EU MiCA transition period, notified users in some EU countries, including France, Italy, Poland, and Spain, that it would restrict or suspend some crypto asset services and halt new user registrations. Binance emphasized that user assets would still be accessible and did not say it would permanently withdraw from Europe; however, after July 1, 2026, unauthorized platforms can no longer provide full services to EU customers as before.

This news is striking because the protagonist isn't a small exchange or a fledgling project, but Binance. Over the past few years, Binance has experienced regulatory adjustments in multiple markets globally: some withdrew its applications, some suspended services, and some reapplied under a different entity. Regarding MiCA, the market initially expected leading platforms to be better positioned to complete the compliance transition faster than smaller projects, but the outcome wasn't so smooth. The EU MiCA timeline is also crucial. July 1, 2026, is a key deadline for the MiCA transition arrangements. ESMA (European Securities and Markets Authority) has previously clearly stated that after the transition period, unauthorized crypto asset service providers cannot continue to solicit new clients or market related services; they can only make client exit and business closure arrangements within a very limited scope. Simply put, Europe no longer accepts the ambiguous situation of "doing business first, then obtaining a license." For Web3 project teams, this news isn't just a problem for Binance. It shows that the European market has moved from a phase of "trial and error" to one of "licensed entry." The old practice of having companies located overseas, teams scattered across Asia, websites targeting a global audience, users accessing the sites themselves, and clauses in the terms and conditions stating "not serving restricted regions" is becoming increasingly difficult to sustain in Europe. Image source: ESMA official website MiCA special page. The real question for Web3 projects isn't "How do I get MiCA?", but rather "Is the European market worth the heavy compliance costs?". What makes MiCA so difficult? It's not about submitting materials, it's about transforming the company into a financial institution. Many project teams, upon hearing about MiCA, immediately ask about price and timelines: How much in Lithuania? How long in Malta? Can I submit my materials to reserve a spot? This question is too simplistic. The CASP authorization under MiCA doesn't govern an empty shell company, but a continuously operating crypto asset service institution. Trading, custody, exchange, order execution, order delivery, and crypto asset transfer services—if the business touches on these functions, regulators will require project teams to disclose details such as shareholders, controlling shareholders, senior management, business model, risk control system, client asset arrangements, AML/KYC, complaint handling, information security, outsourcing, business continuity, and market abuse prevention to regulators. The most easily underestimated aspect is operating costs. Minimum capital is just one aspect of the threshold. The real costs lie in local directors, local compliance personnel, legal counsel, auditing, system upgrades, compliance policies, regulatory communication, and ongoing maintenance. Many Web3 teams previously thrived on speed, community, and product iteration, resulting in very lean organizational structures. MiCA demands a different approach: first, identify those responsible; first, establish customer protection mechanisms; first, clearly define contingency plans; and only then should market expansion be considered. The pressure of MiCA goes beyond just the "expensive license." It will change the company's internal structure. Project teams will need to operate like quasi-financial institutions, rather than as an internet product team patching things up as they go. This is also the real impact the Binance incident had on the market. Even leading platforms may be forced to adjust their European operations on MiCA nodes, so small and medium-sized projects should not think of EU licenses as an outsourcing service package. Europe has always been like this; MiCA is just dragging Web3 into the old script. Some project teams may feel that Europe is particularly harsh on the crypto industry. In fact, Europe is harsh on many industries. Data compliance is governed by GDPR, with serious violations potentially resulting in fines of up to €20 million or 4% of global annual turnover; platform governance is governed by DSA, with large platforms potentially facing fines of up to 6% of their global annual turnover for violations. The EU has long maintained high standards in consumer protection, investor protection, payment compliance, financial marketing, anti-money laundering, and sanctions compliance. Its regulatory logic is stable: you can enter the European market, but you can't just take European users and revenue without accepting the European responsibility system. The Web3 industry used to have a familiar rhetoric: the protocol is decentralized, the code is neutral, users bear their own risks, and the platform is merely a technology service provider. These statements were persuasive within the community, but they didn't work in the face of EU regulation. Regulation looks at what you're doing: whether you're custodian assets, facilitating transactions, helping with exchanges, marketing to European users, processing European user data, or taking revenue from the European market. Europe hasn't suddenly become unfriendly. Europe has simply placed Web3 within its existing regulatory framework. The rules are detailed, the barriers to entry are raised, responsibilities are solidified, and the costs of violations are increased. This approach has been used in data, finance, and the platform economy; now it's the turn of crypto assets. For project teams, complaining about how difficult Europe is is largely meaningless. A more pragmatic question is: is this market worth the cost? The crucial question is: is it really necessary for your project to stubbornly remain in Europe? Europe certainly has its appeal. Strong user purchasing power, mature institutional resources, well-developed financial infrastructure, and valuable regulatory backing. A project that can compliantly enter Europe will benefit in the long run in terms of brand and financing. However, these benefits don't apply to all projects. Many Web3 projects claim to be global businesses, but a closer look at their revenue structure reveals that Europe may not be a core market. Some European users are merely dropshipped users, freebie hunters, or community users, not contributing stable revenue. Some traffic comes from organic visits, and retention rates immediately drop once KYC is strengthened, high-risk products are restricted, or local community operations cease. Some projects include Europe in their business plans simply to make their fundraising story sound better; their business isn't truly reliant on Europe. If annual European revenue cannot cover legal fees, compliance officer costs, local board fees, auditing, system upgrades, and ongoing maintenance costs, then pushing for MiCA compliance is hardly a rational choice. Challenging one of the world's most regulatoryally expensive markets before the business model is even viable may sound like internationalization, but in reality, it might be putting the most difficult hurdle at the earliest stage. For early-stage projects, exiting Europe isn't necessarily shameful. A license isn't a trophy, and more markets aren't always better. Sometimes, ceasing proactive marketing, restricting European users, adjusting user terms, shutting down local communities, and discontinuing certain features are closer to business reality than applying for a license. With limited compliance resources, team energy, and funds, project teams must decide which markets are worth pursuing and which should be put on hold. If Europe isn't profitable, where else can the project go? The answer isn't simply "Dubai," "Hong Kong," or "Singapore." If a project involves trading, custody, exchange, payment, fiat currency deposits and withdrawals, or yield products, it's difficult to find a completely unregulated environment. The difference between different jurisdictions isn't about "having regulation" or "not having regulation," but rather the intensity of regulation, market value, banking channels, licensing costs, business suitability, and reputation for subsequent financing. When choosing a jurisdiction, project teams shouldn't first ask which is the most lenient; instead, they should consider their business, users, funding channels, and the team's implementation capabilities together. If a project is still in the validation phase, the US is generally unsuitable as a low-cost testing ground. FinCEN MSB registration can resolve some anti-money laundering identity issues, but compliance with trading, custody, payment, derivatives, stablecoins, securities, state MTLs, and sanctions may continue to add to the responsibilities. The UK is similar; the FCA's cryptoasset regime is being completed, making it suitable for teams that need the backing of the UK and US financial markets and are willing to make long-term compliance investments. However, if you're simply looking for a less regulated location outside Europe, the UK might not be much easier than the EU. Hong Kong and Singapore are more like two different routes for compliant financial businesses in Asia. Hong Kong's value lies in its regulatory reputation, institutional clients, Asian financial resources, and its ability to connect with narratives such as RWA, stablecoins, brokerages, and asset management. However, VATP has high barriers to entry, and the boundaries of retail business cannot be infinitely expanded. Singapore is more suitable for payments, institutional business, stablecoins, fintech, and regional headquarters. MAS has always been cautious about DPT services, especially discouraging high-risk retail speculation as the main focus. If a project is inherently institutionalized, payment-oriented, or fintech-focused, these two locations are worth considering; however, if you are simply looking for a cheap license, you may be disappointed. Image source: Hong Kong Securities and Futures Commission (SFC) website, virtual asset trading platform list page. Japan and South Korea have high-quality users and market depth, but localization costs are very high. Exchange access, bank relationships, language, regulatory communication, and user habits all require significant investment. These markets are less like a "get a license and serve global users" scenario and more like a localized battle for established projects. Without a local team, channels, and a long-term budget, simply looking at the license itself is meaningless. The UAE, especially Dubai's VARA and Abu Dhabi's ADGM, has been a frequent topic of discussion among Web3 teams in recent years. Its business environment, international talent pool, tax and lifestyle conveniences are indeed attractive to many teams, and it can also reach markets in the Middle East, Africa, and South Asia. However, Dubai is not synonymous with "loose regulation." Virtual asset businesses such as trading, brokerage, custody, payments, asset management, and lending all have licensing frameworks. It's more suitable for projects willing to physically relocate their headquarters, business development, operations, compliance, and part of their team there, rather than projects that simply want a virtual presence to continue operating remotely. Image source: Dubai VARA Rulebook page. Switzerland and Liechtenstein are more suitable for RWA, tokenization, foundation governance, institutional clients, and high-net-worth resources. Their advantages lie in regulatory reputation and long-term brand, not in low cost and fast pace. The Cayman Islands and BVI are more commonly used for holding companies, funds, foundations, token issuers, governance structures, and SPVs. These remain useful architectural tools, but they shouldn't be packaged as global user service licenses for trading, custody, and payment businesses. Bermuda, the Bahamas, Seychelles, El Salvador, and other locations can be evaluated as offshore VASPs or emerging digital asset regulatory markets. They each have their own strengths and weaknesses in terms of cost, speed, flexibility, and regional narratives. Bank access, regulatory reputation, target customer acceptance, and subsequent financing impact must all be considered. Offshore licenses prevent projects from operating completely naked, but they don't prove that projects can freely serve retail users in Europe and America. Do you want users or banks? Do you want a financing narrative or low-cost operations? Do you want to serve retail or institutional clients? Without clarifying these questions, any license recommendations will be distorted. Some projects shouldn't prioritize obtaining licenses; instead, they should clarify their business boundaries. Another type of project's most urgent task isn't acquiring licenses, but rather defining its business boundaries. The regulatory pressure on non-custodial wallet front-ends, open-source protocols, node services, data analysis, B2B technical tools, foundation governance, and token treasury management is entirely different from directly providing trading, custody, and payment services to users. The problem is that many teams mix these things together. The front-end claims to be a technical service, while the back-end is driving traffic to transactions; the terms state they don't serve restricted regions, yet local KOLs are advertising; the company is registered overseas, but the actual operations team, customer service, and decision-making are in Asia; the project claims not to custody assets, yet it can influence asset circulation in key processes. Regulators don't just look at how a project describes itself. They look at where users come from, how assets move, who controls key processes, who collects money, who does marketing, and who handles problems. If the business facts aren't clear, the licensing scheme won't be either. For these types of projects, the first step isn't asking "which country is cheaper," but rather breaking down the functions. Custody, trading, exchange, payment, deposits and withdrawals, returns, token issuance, marketing, community operations, data processing—under which entity, who is responsible, which users, where revenue is recognized, and where risks are implemented. Only after this breakdown can we know which businesses need to be scaled back, which links can be handed over to licensed partners, which markets to exit, and which licenses are worth applying for. Conclusion: Compliance is not about collecting licenses, but about choosing a battlefield. Binance's failure to meet MiCA's deadline doesn't mean all Web3 projects should rush to Europe for licenses. It reminds project teams that the window for extensive global operations is narrowing. In the past, Web3 projects liked to portray themselves as global projects. Websites and communities were global, users accessed them independently, and regulatory issues were considered later. After MiCA, Europe remains open, but the entry fee is high, security is strict, and long-term inspections are required after entry. This market is suitable for projects that already have revenue, governance capabilities, local teams, and are willing to accept long-term regulation; it's not suitable for every team to try and fail. For most projects, figuring out the value of European users, which business operations should be scaled back, which processes can be outsourced to licensed partners, and which jurisdictions are more suitable for the current stage is more important than blindly applying for MiCA. Even Binance needs to recalculate its European strategy; other projects have even less reason to obsess over the "global market." The next phase of Web3 compliance will not be about how many licenses a project has collected, but about its ability to make market choices.