# Reverse solicitation for crypto companies - Diana Stetiu | Diana Stetiu Law Office

- Channel: [ETH Belgrade Community](https://streameth.org/eth-belgrade-community)
- Date: 2025-10-07
- Duration: 18:45
- Watch: https://streameth.org/watch/yt-Kboocnj9yYY
- YouTube: https://www.youtube.com/watch?v=Kboocnj9yYY

## Description

Reverse solicitation for crypto companies - Diana Stetiu | Diana Stetiu Law Office

## Transcript

Hello everyone. Thank you for having me. Such a pleasure and honor to be here. So um just to give you a little bit of background in 2024 with a client from Poland uh who is a crypto exchange we applied for a Mika license in the Netherlands and it was a super complex uh process where we learned a lot of stuff and uh while we were interacting with the authorities in the Netherlands uh One question was um is the Polish entity somehow giving services uh already in the Netherlands? We said no because we weren't servicing uh clients from the Netherlands. And while we were constructing the argument to the question, we're thinking about reverse solicitation and we made like a deeper dive into the topic. But reverse solicitation, it's something that works for non-EU companies when in certain conditions they service clients from the EU. It's not the other way around like in the EU company servicing EU. It's from companies which are not based in the EU. However, they are servicing EU clients. and Mika regulation um which is our biggest piece of legislation when it comes to crypto space was published in 2023 in June in the official journal of the European Union and it came into force starting with 30 of December 2024. In uh this process, ESMA European security market authority was empowered under Mika to produce technical guidelines, standards in order to further regulate certain aspects from Mika regulation and it started with a public consultation in uh early 2024. before where ESMA consulted the web3 sector to get their polls and see what the sector is thinking with respect to the proposed future regulation. By the end of 2024 on um 17 of December, ESMA issued reverse solicitation final report technical standards guidelines. So what is this reverse solicitation? You need to imagine like this. You are a Serbian company, let's say, and you are a crypto exchange servicing Serbian clients. But how do you approach or you let yourself to be approached by clients from the European Union? And here is the topic of reverse solicitation. Bottom line this would mean like this. You exist. You have a website and the client on its own initiative comes to you and ask for service. And now I want to deep diver with you to help you understand the concept, how it works and why it is needed. Reverse solicitation is a concept across all financial sector. Um maybe the most famous one was under MIDI regulation where it's article 42 basically saying explaining how it works reverse solicitation. Bottom line, you are a client from the European Union and you just go based on your own initiative to request services from an investment company where you can invest um and in our case after Mika regulation from a crypto company. But it's super important if you are a crypto company to do what it takes to be compliant and to remain safe if you are relying on the concept of reverse solicitation because this means that you don't have a license you are having your own license from your home country but servicing across European Union and when you don't have a license as it is prescribed to have this reverse solicitation concept. It's very very narrow in the sense that if you do it you'll have to make compliant guidelines from your team members from your for your employees how they are going to record who is the client in what circumstances the client approached them because you want to prevail the reverse solicitation and also say we haven't promoted there in that country. We didn't do advertising in that country. It was the client on its own initiative. And this is important because you need to h to have a compliance officer who is aware of this and it's able to make guidelines for the company procedures policies in order to be able to have the records have recordeping in case of certain national competent authorities coming into control or something. You have to show that you did your homework and the reverse solicitation concept that you are relying on it's very well documented. This reverse solicitation is indeed an exemption from the general rule of having a license, a license under Mika regulation because this is what we are talking about now to service clients across European Union. And this exemption like the majority of exemptions is very circumstantiated. I would say certain conditions, certain aspects and very narrow interpretation. Why broadly? Because broadly interpretation according to ESMA means that um for example if you move a little bit more than necessary you can fall under the interpretation that you are advertising. So that's why every certain move you make can be interpreted in a broad way that you are advertising without the license and this is big and you risk um reputational damages, trust of the clients, fines from the authorities. So in that public consultation from ESMA with a web3 sector um they wanted to know how the web3 sector is preparing to rely on reverse solicitation concept. Therefore, there was an exchange of information between us, the sector, and the authority. And the authority came to the conclusion that there are solicitations. Meaning that you as a company are not just passive and the client is approaching you based on its own initiative but you are soliciting the client to come and buy services from you. When you do the following without limitation, of course, commercials, brochures, maybe you give a telephone call, like cold emails or cold phone calls, you set up a face-to-face meeting, maybe you give a press release to advertise how great your services are and how the clients from that country should become yours. send them emails, maybe have influencers, organize competitions, and basically you name it. It's a lot of marketing and deriving other other actions from marketing which could mean that you are soliciting clients and you need to be very careful if you don't have a license. Do you really want to solicit clients? If you want to promote yourself because it's normal in web three we promote the services the companies the founders how you are going to do it that's why I was mentioning before and I will emphasize it again you need a good compliance officer who's able to give you procedures and policies to remain safe something super important for example if you choose choose another language other than English which is the normal business in business language. Um for example, you choose a website in Hungarian, you choose a website in Romanian, would that mean that you are soliciting a client and you are active in targeting clients? Yes, it would mean so. And the main concept of reverse solicitation, it's the client's exclusive initiative. This is basically the only moment when you as a company not having a license can remain safe if you can prove that the client had had his or her own initiative to approach you and to be serviced by you. And one more super important thing. If the client came once for a certain type of services and then he became the client, would you be entitled as a crypto company to say look I have some other type of services? You just wanted to let's say exchange fiat for crypto but I have also a custodial wallet. If you want to deposit crypto in my custodial wallets, that would be a different type of service. Under Mika regulation, when you apply, for example, for services to be authorized, you have for each category a different service. Exchange of funds for crypto and crypto for other crypto. It's a service. custody and administration of clients funds. It's another service and this is just an example. And now let's have in mind what can we consider as implication of reverse solicitation. First of all, if you are a country which is not if you're a a a company which is not authorized in a country from the European Union to provide services under Mika. It would be good to be very cautious. This is the the biggest implication being very cautious how you allow clients and how you document that they had the initiative and it was exclusive that initiative to reach out to you. It's super important because you want to stay safe. You don't want fines. You don't want asma to be on your head. You don't want the national authority to come to you and most of all you want to continue as a trusty company which has proven to be worthy of the trust of the clients. My main takeaways for you based on the experience we had with the authorities and how we wanted to explain um ourselves to the question if not yet authorized. Are we however servicing clients from the Netherlands? is that the reverse solicitation first and foremost goes for non-EU companies once the grandfathering rule expires and Mika becomes fully applicable. That's the moment, the main takeaway when you need to be super careful. If you are intending somehow not to block the access, you know, there is jail blocking, there is somehow scanning the IP addresses and there are some measures that you could do. But if you don't do them because you want to leave to the client the possibility to exercise its own initiative, be prepared with the necessary documentation for that. And I'm reaching the end of this presentation, but I would like to receive your questions or any sort of thoughts that you would like to share. and to discuss more. >> Okay. Thank you, Diana. Let's give her a big applause. So, we can start with a Q&A session. If you have a question, please raise your hand. And our volunteer is going to pass you the microphone. We have a question over there. Uh thank you for the presentation. Uh I have the following question. uh what are the risks of EU company that directs its cl its clients or customers to uh to a company non-EU company. Uh yeah >> uh it is a big risk because um ESMA in in the guidelines um put it super expressive. You are a company from the European Union. You shouldn't be directing um clients with companies outside or if you're a company from the outside, you need to take responsibility that you are servicing. This kind of um u diversion and uh redirecting clients from a company to another just to evade a prescription of the law can be sanctioned. uh w with fines I guess. >> Yes. >> Thank you. >> And the reputational damage of course. >> Okay. Do we have any more questions? Right over there. Thank you for for presenting. Um do you have any example you could speak of of enforcement action regarding web 3 companies that misbehave? I I don't have enforcement that was already in place. Um but um national competent authorities from Western European Union countries seem to be very harsh. They are proactively asking um if you are not licensed and not licensed under Mika and you service. I think uh sooner or later this will happen. It's a little bit too early to talk about enforcement because ESMA came only on 17 of December 2024 with the final report on reverse solicitation. So we are still under grandfathering rules. I think up until uh 1st of July 2026, we cannot talk about enforcement.