What is reverse solicitation?

A narrow exemption allowing a firm outside a jurisdiction to serve a customer there when the customer approached the firm entirely on their own initiative.

Offshore exchanges lean on it to argue they may accept users from regulated markets without local authorization. Regulators read it strictly: any marketing, advertising, or targeting of local users generally destroys the exemption, and it does not extend to new products the firm later offers the same customer.

The reason to understand it is not legal curiosity. It explains why an exchange with no license where you live still lets you open an account, and why that account can be closed, restricted, or geoblocked at short notice when supervision tightens.

How it works

The exemption exists so that a person who genuinely seeks out a foreign provider is not prevented from doing business with it. Its scope is deliberately small.

1. The initiative must be the customer's. The firm must not have solicited, advertised, or promoted to that market. Regulators read solicitation broadly, covering advertising, sponsorships, influencer promotion, and local-language marketing.
2. It attaches to the transaction, not the relationship. Once the exemption is used, the firm generally cannot then market further products to the same customer without triggering authorization requirements.
3. The burden sits with the firm. It must be able to show the approach was unprompted, which is difficult where any promotional footprint exists.
4. It does not transfer protections. The customer is dealing with a firm outside the local regime, so local complaint schemes, compensation arrangements, and conduct rules generally do not apply.

Under the European Union's markets in crypto-assets regulation, the exemption is written narrowly and European supervisors have repeatedly warned firms against relying on it as a business model. See mica and casp.

Example

Illustrative pattern. An offshore exchange runs no advertising in a jurisdiction, has no local entity, and offers no local-language site. A resident finds it independently and opens an account. The exchange argues the exemption applies.

The same exchange then sponsors a sports team in that country, runs local-language advertising, and pays local influencers. The exemption is no longer available for new customers arriving through that channel, and the supervisor now has a straightforward case that the firm is soliciting business it is not authorized to conduct.

The practical outcome for users is usually not a court case. It is geoblocking, mandatory withdrawal notices, or product restrictions applied to existing accounts.

Why it matters when you buy

An account you can open is not the same as an account that is licensed to serve you, and the difference shows up when something goes wrong or when the venue withdraws from your market. Checking what is authorized where you live before depositing is the cheap version of that lesson. The jurisdiction pages record what each place permits, exchanges available in your jurisdiction lists venues, and why you cannot buy this coin covers the access side.

Related terms

mica — the European framework with a narrow version; casp — the authorized firm category; geoblocking — what firms do to stay compliant; vasp — the regulated service provider; financial promotion — the marketing rules that destroy the exemption; kyc — where jurisdiction is established.

Questions

Can I use an offshore exchange if I found it myself?

Sometimes, but the exemption protects the firm rather than you, and only in narrow circumstances. Using a venue not authorized where you live typically means no access to local complaint or compensation schemes.

Why does an exchange without a local license still accept me?

Often because it relies on this exemption, or because enforcement has not reached it yet. Neither is a durable arrangement, which is why access can disappear with little notice.

What usually happens when a regulator objects?

The venue geoblocks the country, restricts products, or issues withdrawal deadlines for existing accounts. Trading typically stops before withdrawals do, and the withdrawal deadline is the date that matters.