When regulators design sweeping new frameworks for the crypto industry, they typically assume that users pushed off non-compliant platforms will land somewhere supervised — a licensed exchange, a registered broker, a compliant custodian. Binance co-CEO Richard Teng is now putting hard data behind the argument that this assumption, at least in the European Union, is fundamentally wrong.
Teng recently disclosed that 70% of EU users who departed Binance following the implementation of the Markets in Crypto-Assets (MiCA) regulation did not migrate to a competing licensed platform. Instead, they moved into self-custody — hardware wallets, software wallets, non-custodial setups — removing themselves almost entirely from the supervisory perimeter that MiCA was designed to establish. In Teng's framing, that is not a regulatory success. It is a regulatory own goal.
The Compliance Paradox at the Heart of MiCA
MiCA represents the EU's most ambitious attempt to bring crypto markets under a unified legal roof. The framework — years in the drafting — establishes licensing requirements for crypto asset service providers, consumer protection obligations, stablecoin reserve rules, and disclosure standards that, in theory, bring digital assets closer to the oversight standards applied to traditional finance. The political logic was straightforward: if you regulate the on-ramps and the exchanges, you capture the bulk of crypto activity inside a supervised perimeter.
What Teng's figure suggests is that this logic underestimates how easily crypto users can route around institutional friction. Unlike a brokerage account or a bank, crypto infrastructure is permissionless by design. A user who finds a regulated exchange too restrictive — whether due to new Know Your Customer requirements, asset delistings mandated under MiCA compliance, or geographic restrictions — faces virtually zero technical barrier to switching to a self-hosted wallet. The private key is the account. No institution required.
The 70% figure matters because it reframes what "protecting consumers" actually means in this context. If seven out of ten users departing a regulated, surveilled, insured exchange end up in a self-custody environment with no recourse mechanism, no fraud protection, and no transaction monitoring, regulators have arguably reduced consumer protection, not enhanced it. The users are still active in crypto markets — they have simply become invisible to the frameworks designed to supervise those markets.
What Self-Custody Really Means for Oversight
Self-custody is not inherently dangerous — many of the most security-conscious crypto participants use hardware wallets precisely because centralized exchanges carry their own custodial risks. But the regulatory calculus is different. A user on a MiCA-compliant exchange is subject to transaction reporting, sanctions screening, and capital gains data sharing. A user operating a self-custody wallet interacts with decentralized protocols where none of those obligations apply in any practically enforceable way.
For Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) frameworks, the mass migration of retail users into self-custody is a significant problem. The EU's Travel Rule — which requires crypto asset service providers to share sender and recipient information on transfers above certain thresholds — applies to regulated platforms, not to peer-to-peer wallet transfers or decentralized exchange interactions. Every user who exits a regulated platform and moves to self-custody represents a transaction flow that drops off the compliance map.
Teng's characterization of MiCA as "backfiring" is pointed, and carries obvious self-interest — Binance is a regulated platform navigating an expensive compliance buildout under MiCA's demands. But the underlying data point is structurally significant regardless of the source. Regulators and exchange executives rarely agree on much, but the math on user behavior does not require a particular ideological reading: if the dominant response to tighter exchange regulation is exit to unregulated infrastructure, the policy outcome diverges sharply from the stated intent.
What This Means for the Future of Crypto Regulation
The EU's challenge now is a familiar one in financial regulation: rules written for intermediaries struggle to capture activity that can bypass intermediaries altogether. The answer, historically, has been to chase the on-ramp and off-ramp points where crypto meets fiat — but as stablecoin usage grows and decentralized finance (DeFi) matures, even those chokepoints become less reliable as enforcement levers.
The more interesting policy question is whether frameworks like MiCA need to be redesigned with this user behavior in mind — not to make self-custody illegal, which would be both technically futile and politically toxic, but to understand that regulatory pressure on exchanges may have a ceiling effect. Beyond that ceiling, pushing harder does not drive more users into compliant channels. It drives them out of visible channels entirely. Richard Teng's 70% figure is not just a lobbying talking point. It is a data point that should force a serious recalibration of how the EU measures whether its crypto regulatory strategy is working at all.
Written by the editorial team — independent journalism powered by Bitcoin News.