Coinbase and Gemini Strive for EU Licenses Amid Regulatory Challenges
As the cryptocurrency landscape evolves, two major players, Coinbase and Gemini, are making significant strides towards obtaining licenses to operate across the European Union. These efforts come in the midst of differing regulatory standards among EU member nations.
Europe: The Next Frontier for Gemini and Coinbase
Gemini, the cryptocurrency exchange launched by Tyler and Cameron Winklevoss, is on the brink of acquiring a license from Malta—an EU member known for its swift approval of crypto firms like OKX and Crypto.com earlier this year. Simultaneously, Coinbase is reportedly close to securing a license in Luxembourg, marking it as the first US-based crypto company to be sanctioned under new EU regulations.
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Industry insiders reveal that Coinbase’s operations in Luxembourg will initially be modest. A company representative conveyed to Reuters their commitment to investing in European staff to uphold operational security, employing approximately 200 individuals across Europe.
These developments occur as the relationship between the cryptocurrency sector and Ireland becomes strained. The Central Bank of Ireland has expressed reservations about cryptocurrencies, with its governor equating them to Ponzi schemes. Moreover, the licensing procedures have faced scrutiny from various national regulators who worry about the pace and thoroughness of approvals.
Regulatory Concerns Over Expedited Licensing
The introduction of the Markets in Crypto-Assets (MiCA) regulation aims to align cryptocurrency operations with conventional financial oversight, permitting countries to issue licenses that enable crypto companies to operate throughout the 27-member EU bloc.
However, some regulators are apprehensive that lenient enforcement might undermine the regulatory framework’s goals, potentially leading to issues such as fraud and market volatility. Malta’s rapid licensing has particularly raised concerns among other EU regulators, including those within the European Securities and Markets Authority (ESMA).
France’s Autorité des Marchés Financiers (AMF) has highlighted the risk of a “regulatory race to the bottom” due to insufficient direct oversight from ESMA. Concerns have also been raised about whether countries like Malta have enough regulatory staff to ensure a robust licensing process.
In defense, the Malta Financial Services Authority asserts that its expedited approvals are rooted in years of experience and strict adherence to local anti-money laundering protocols. Since the introduction of MiCA, Malta has issued four crypto licenses.
The ongoing debates within the EU underscore the complex dynamics between member states as they vie for international business. Despite the EU functioning as a unified trading bloc, individual countries compete for the attention of crypto firms, often resulting in regulatory inconsistencies.
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