What is Reverse Solicitation?

Reverse Solicitation

Why Reverse Solicitation Matters

Reverse solicitation has been widely used — and abused — by crypto companies seeking to serve clients in jurisdictions where they lack authorization. Before MiCA, many crypto exchanges used reverse solicitation claims to justify serving EU clients without local licenses. MiCA significantly tightens this exemption, making it clear that reverse solicitation is an exception for genuinely client-initiated relationships, not a loophole for avoiding licensing requirements. Regulators worldwide are cracking down on firms that use reverse solicitation as a substitute for proper authorization.

Regulatory Implications

Reverse solicitation has specific regulatory implications across frameworks:

• MiCA (EU): Article 61 allows third-country firms to serve EU clients who initiate contact on their own exclusive initiative, but strictly prohibits any form of solicitation, promotion, or advertising. The exemption applies on a per-service basis — once a firm solicits any client in the EU, it cannot rely on reverse solicitation for others.
• Documentation requirements: Firms relying on reverse solicitation must maintain evidence demonstrating that the client genuinely initiated the relationship without any prompting.
• ESMA scrutiny: ESMA has flagged reverse solicitation abuse as a priority and is expected to issue guidance on what constitutes solicitation in the digital context (website targeting, app store availability, social media presence).
• UK/FOS: The UK's Financial Services and Markets Act has its own overseas persons exclusion, with similar restrictions on active marketing to UK clients.
• Enforcement risk: Using reverse solicitation as a business model rather than a genuine exception exposes firms to enforcement action for operating without authorization.

How Reverse Solicitation Relates to Compliance Monitoring

Reverse solicitation rules and their enforcement are evolving rapidly, particularly under MiCA. ESMA guidance, national regulatory interpretations, and enforcement actions will shape how narrowly this exemption is applied. RegPulse monitors all developments related to reverse solicitation, cross-border service provision, and third-country firm access across the EU, US, and UK.