FRANKFURT, Germany: Binance, the world's largest cryptocurrency exchange, is at risk of losing access to the European Union market after its application for a key regulatory license was set to be rejected, according to two people familiar with the matter.

The decision could prevent Binance, which is headquartered in Abu Dhabi, from continuing to serve customers across the 27-member bloc from July under the European Union's new Markets in Crypto-Assets (MiCA) framework.

The exchange applied for a license through Greece's market regulator, but the application is expected to be turned down, the sources said.

Under MiCA rules, crypto companies must obtain authorization from a regulator in an EU member state by the end of June to continue operating across the bloc through a so-called passporting system.

European authorities have stepped up oversight of cryptocurrency firms in recent years amid concerns that the fast-growing industry could pose risks to investors and financial stability if left unchecked.

A rejection of Binance's application would leave the future of its EU operations uncertain and raise questions about how the company will continue serving customers in the region.

After Reuters published its report, Binance said in a post on X that it intended to "support an orderly process and minimize disruption to our users," without providing further details.

A Binance spokesperson said the company had spent the past 18 months working with regulators and pursuing MiCA authorization.

The spokesperson said Binance believes it has met the requirements for approval and understands that Greece's Hellenic Capital Market Commission has completed its review and deemed the exchange compliant.

"HCMC has given no formal indication of the contrary," the spokesperson told Reuters.

Binance serves roughly 300 million customers worldwide and has been seeking a regulatory base in Europe as governments tighten oversight of digital assets.

Earlier this year, Binance co-CEO Richard Teng said Greece's workforce and security profile made it an attractive location for the company's European regulatory hub.

The Hellenic Capital Market Commission declined to comment on the application, citing confidentiality rules.

Without a MiCA license, Binance would not be eligible to continue operating across the European Union when the new regime takes full effect at the beginning of July.

The company said it would provide a further update before June 30 and warned that delays in the MiCA authorization process could push crypto-related activity outside the European Union.

The case marks a significant test of Europe's new regulatory framework, which is designed to bring greater oversight and accountability to the cryptocurrency industry.

Binance has faced regulatory scrutiny in several jurisdictions in recent years. Its founder and former chief executive, Changpeng Zhao, known as CZ, was pardoned by U.S. President Donald Trump last year after previously pleading guilty to violating U.S. money-laundering laws.

Cryptocurrencies are digital assets recorded on blockchain technology and traded through exchanges such as Binance, which remains the largest platform in the sector by customer numbers.