Christine Lagarde Helped Block Binance's Foothold in Europe — WSJ

By Angus BerwickBinance was preparing a big announcement in late May that would unlock the European market for the world's largest crypto exchange.Its application for a Europe-wide license, made through the Greek financial regulator, was complete, Greek officials had told Binance. A company press release, headlining a "Major Milestone," was ready to go. Binance CEO Richard Teng was planning to fly to Athens for a photo shoot with the prime minister, and his local deputy was about to sign an office lease.European Central Bank President Christine Lagarde had other ideas.Days later, a top official at the Greek regulator told Binance that Lagarde had personally intervened to thwart the license application, people familiar with the interactions said.Lagarde wanted to keep the controversial crypto exchange, which pleaded guilty to financial-crime violations in the U.S., out of the European Union, the official told Binance.After a last-minute scramble to win over European authorities, Binance's plans fell apart. The exchange failed to obtain the license before a July deadline set by the EU's new crypto rules, forcing Binance to stop promoting services to the bloc's 450 million residents."Sad to see EU cutting their users off from the best liquidity in the world," Binance founder Changpeng Zhao tweeted.The back story to Binance's chaotic retreat from Europe hasn't been previously reported. This account is based on interviews with people familiar with the interactions, as well as documentation reviewed by The Wall Street Journal.The ECB doesn't play an official institutional role in approving crypto exchanges' license applications, which the EU's new crypto rules, known as MiCA, put in the hands of national regulators. But Lagarde's willingness to roam widely across European policy has characterized her ECB tenure, due to end next year.Lagarde has often sought to shape the EU's policies beyond her core monetary-policy domain, taking stands on issues such as climate change and extremist politics that she views as risks to the continent's economic future.When Commerce Secretary Howard Lutnick bashed Europe on stage in Davos in January, Lagarde conspicuously walked out. She waded into presidential politics last week by criticizing France's far-left candidate for a plan to write off government debt.A separate supervisory body, the European Securities and Markets Authority (known as the ESMA), which coordinates between EU members on enforcing the crypto rules, also privately advised national regulators to block Binance's applications because of its compliance record, the Journal previously reported.Binance and Zhao pleaded guilty in 2023 to anti-money-laundering violations that allowed the exchange to turn into a global dirty-money hub, and paid a record $4.3 billion fine. President Trump last October pardoned Zhao, who served four months in prison.This year, the Justice Department has been investigating Iran's use of Binance to evade U.S. sanctions since the guilty plea. Federal prosecutors said this week, as part of a forfeiture case, that an Iranian network used Binance to relay payments for Iranian oil from Chinese buyers. A Binance spokesperson said the civil case doesn't allege any wrongdoing by the exchange and the company has "zero tolerance for sanctions violations."Greece's regulator, the Hellenic Capital Market Commission (the HCMC), said it assessed Binance's application "independently and exclusively against the applicable EU and national requirements."ESMA said it works with national authorities "to ensure the consistent application of the rules across the EU and to minimize the risk of regulatory arbitrage."Binance began pursuing its Greek plan over a year ago, drawn by Prime Minister Kyriakos Mitsotakis's pitch to foreign companies that they "come for the sun, stay for the taxes and technology." Because Greece is an EU member, basing there would give Binance access to the entire trading bloc.Executives told the Greeks a Binance base there would generate 200 million euros, or around $230 million, in tax revenues and 100 well-paid local jobs. The exchange's head of Europe flew in weekly to meet the Greek regulator and spoke regularly with the finance minister's chief adviser.The adviser, Vassilis Karatzas, said the ministry's interactions with Binance were consistent with its "open-door policy towards all prospective investors."Binance submitted its application just before the end of 2025. It created a local firm called Binary Greece, owned by an Abu Dhabi-based entity with Zhao as a shareholder. Zhao remains the majority owner of Binance, which largely operates from the United Arab Emirates.Greek officials informed ESMA's digital-finance committee in early June that the regulator intended to approve Binance's license, according to the people familiar with the process.Within a day, a Hellenic Capital Market Commission vice chair told Binance that Lagarde had asked the Greek prime minister not to approve it. The regulator warned that it couldn't move ahead without the support of Mitsotakis, who two weeks earlier had sat next to Lagarde at a forum in a Greek beach resort.A spokesman for Mitsotakis referred comment on Binance to the finance ministry. Karatzas, the finance minister's adviser, said the HCMC was an independent authority and "the Greek Government had no role whatsoever in its assessment of Binance's application."The vice chair told Binance that Lagarde wanted to delay the decision until ESMA could take over license decisions for crypto exchanges from national regulators-a EU proposal the central bank formally backed in April to prevent "risk migration into the banking system."The HCMC spokesperson said comments attributed to its officials weren't made by them, without elaborating.Lagarde, the vice chair told Binance, also wanted to protect the ECB's "digital euro" project that aims to create a single digital-payment option to cover the euro area, according to the people familiar with the matter and the documentation reviewed by the Journal."I want the euro to be fit for the future," Lagarde told the Journal in February, saying she hoped the project would be part of her legacy.The vice chair said Lagarde worried Binance's scale would embed the dominance of dollar-based stablecoins in Europe, instead of encouraging euro versions. Most trades on Binance are in dollar cryptocurrencies, which make up more than 99% of the global stablecoin market.A week after the committee meeting, HCMC officials told Binance the license wouldn't be going ahead, citing a lack of "convergence," according to the people familiar with the interactions. Binance withdrew its application in mid-June before the HCMC's board could formally reject it.Binance said publicly it would pursue an EU license elsewhere. A Binance spokesperson said at the time that MiCA shouldn't be "a process where applicants can be privately undermined through informal channels."Meanwhile, the exchange has kept servicing some European customers from Abu Dhabi, citing an interpretation of EU rules that allows unlicensed crypto firms to sign up clients who they haven't solicited through advertisements and marketing campaigns. Binance said it "remains committed to operating on a long-term, compliant basis" in the EU.Write to Angus Berwick at [email protected]