On February 26, 2025, the European Securities and Markets Authority (ESMA) published guidance on EU residents signing up on foreign platforms, known as ‘reverse solicitation’ under Article 61 of MiCA. Before the update, EU residents could sign up to foreign platforms of their own initiative; while that is still allowed, the new interpretation is much stricter. guidance guidance This new update focuses on crypto asset services providers (CASPs) not licensed in the EU. Their focus is on reverse solicitation under article 61 of MiCA and highlights the challenges that non-EU firms face when offering crypto asset services to EU customers. The guidelines seek to create a uniform framework for assessing when non-EU firms are deemed to be soliciting clients in the EU. They have two key goals, which are: Prevent MiCA circumnavigation Ensure coherent supervision across EU authorities Prevent MiCA circumnavigation Ensure coherent supervision across EU authorities According to ESMA, the measures will ensure a level playing field while protecting customers in the EU by ensuring only licensed operators can offer their services. Challenges For Non-EU Crypto Service Providers Challenges For Non-EU Crypto Service Providers For crypto asset providers without an EU license, the update presents a serious challenge, which includes a stricter definition of solicitation. Under the new guidelines, any act which offers, advertises, or promotes crypto asset services within the EU, even indirectly, will be considered solicitation. Even a marketing campaign of a general nature that reaches the EU could fall under this categorization. That means if a non-EU company mistakenly engages with EU clients via proactive marketing campaigns, they may be considered to be soliciting. Such a circumstance may trigger sanctions for MiCA violation. In the guideline, foreign crypto firms without EU CASP licenses are recommended by ESMA to undertake preventative measures. New guidelines could force firms to engage in geo-blocking efforts to ensure their marketing material does not reach the EU. However, still legally reverse solicitation limitations apply if an EU client initiates contact of their own volition. The Definition of Solicitation The Definition of Solicitation Solicitation covers a wide range of actions, and includes any promotion, ad, or offer of crypto services to clients within the EU. ESMA has intentionally made the definition as broad as possible to cover all possible traditional, and digital marketing channels. Interestingly, it includes face to face meetings. The guidelines also cover third party solicitation, such as through influencers whose content is available in the EU. A major exemption is educational material and industry events, where the main focus is the sharing of knowledge regarding the underlying technology or innovations. However, if audiences are directed to a non-EU platform that offers crypto services, it could be considered promotional. The broad coverage of the guidelines ensures that any effort to build a brand presence in the EU, with proper licensing, could be scrutinized under the new framework. Best Practices For Non-EU Companies Best Practices For Non-EU Companies While the new guidelines are highly restrictive, there are still ways for crypto asset service providers to access EU clients. For one, the guidelines do not ban non-EU companies from offering their services to clients within the EU. It only bans them from engaging in any solicitation. Commenting on the guidelines, Peter Kerstens, the EU commission adviser who helped craft MiCA, noted that if a non-EU company, in the normal course of its operations, receives a request from an EU client, it should not reject it. It also noted that enforcement action by the EU would be difficult for service providers without an EU presence. To ensure companies do not face any conflict with the EU, some common best practices can include: noted noted Clear Record Keeping Clear Record Keeping When interacting with EU clients, companies should ensure that they have detailed records of these interactions that document all engagements. By demonstrating that clients initiated interactions, they can lessen the likelihood of any EU pressure. Review Marketing Materials Review Marketing Materials It is important that all marketing materials are reviewed, including ads, social media posts, and event invitations to ensure they do not target EU clients. Geo-Blocking As A Last Resort Geo-Blocking As A Last Resort For some firms, geo-blocking might be a simpler measure than trying to ensure their marketing material does not reach EU clients. It ensures that IP addresses from the EU do not reach their services. However, that could limit organic business opportunities. Post Sign-Up Limitations Post Sign-Up Limitations If a company acquires an EU client organically, there are still strict limitations on what they can do with them. The rules restrict the company from showing them any promotional material regarding any of their other crypto services. That means they should not receive website popups, email updates, or promotional banners. The Implications For EU Residents The Implications For EU Residents Article 61 of MiCA can be interpreted differently by different companies. The clarification from ESMA and how it will apply will be guided by legal practice. While Virtual Asset Service Providers (VASPs) are not limited from offering their services in the EU, it makes it nearly impossible for them to work there. For instance, under the strictest interpretation of the solicitation rules, if an EU client joins a crypto platform and buys BTC, they should not be able to see any other asset offered on the platform, as that would constitute a form of incidental advertising. The EU already has some of the strictest rules that have limited the options that residents have. For instance, under the MiCA rules that came into force in December 2024, stablecoin providers are required to register in the EU. The outcome has been that all EU VASPs have stopped offering USDT and other stablecoins, as none of the stablecoin operators have applied for an EU license. Under Article 61 of MiCA, non-EU companies can technically offer their services to EU residents. However, the recent interpretation by ESMA means that is virtually impossible. One of their recommendations is that non-EU companies geo-block their services, which signals their goal is to discourage all VASPs not registered in the EU from offering their services. Conclusion Conclusion The new guidance from ESMA on Article 61 of MiCA serves as a reminder that compliance in the EU for VASPs is an evolving field that requires a proactive approach. Third-country service providers must balance their goal of growing their client base with strict adherence to the rules on incident solicitation. While ESMA's enforcement of VASPs outside the EU might be limited, it could impact their future attempts to acquire an EU license if they do not adhere to the new guidance. Overall, staying informed is key to sound business operations. For users of crypto asset providers, it is also important to ensure that the platform they utilize complies with the rules to avoid a sudden cut in access due to EU pressure. 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