October 19, 2023 at 11:39 GMTModified date: October 19, 2023 at 11:39 GMT
October 19, 2023 at 11:39 GMT

Ireland chosen for Coinbase’s EU MiCA hub

The Coinbase exchange has chosen Ireland as its regulatory hub within the European Union, the firm announced today.

Ireland chosen for Coinbase’s EU MiCA hub

American crypto exchange Coinbase has chosen Ireland as its regulatory hub within the European Union, announced the firm today, 19 October.

The country is known for its friendly attitude towards fintech companies and is already a host to tech giants like Apple and Google. It comes with a “supportive political environment” as well as a “globally respected regulator”, said Coinbase EMEA vice president and regional managing director, Daniel Seifert.

He added: “Ireland is a leading jurisdiction in this space, and we look forward to working with regulators in Ireland, Germany and beyond, to bring this industry to its full potential with the advent of MiCA.”

The decision comes on the back of the upcoming EU laws known as the Markets in Crypto Assets regulation (MiCA). The regulation seeks to establish harmonised rules for crypto-assets at EU level. This includes providing legal certainty for crypto-assets not covered by existing EU legislation. It therefore aims to promote innovation and the use of crypto-assets by enhancing the protection of consumers and investors as well as financial stability.

The new laws would allow crypto service providers to operate across the bloc based on a licence from one of its 27 national regulators. Coinbase chose Ireland for its European Union entity, which would help it in serving one of the largest economies in the world under one regulatory framework and with one national supervisor.

Earlier this month, European Securities and Markets Authority (ESMA), EU’s financial markets regulator and supervisor, published its second consultative paper on MiCA. It sought to input five sets of proposed rules including: sustainability indicators for distributed ledgers, disclosures of inside information, technical requirements for white papers, trade transparency measures, record-keeping and business continuity requirements for crypto-asset service providers (CASPs).

Coinbase already holds an e-money institution licence and virtual asset service provider (VASP) registration in Ireland. It has also won regulatory approvals in Italy, the Netherlands and Spain.

In a blog post that was published in September, the exchange revealed plans for an international expansion. Here, it said that the Coinbase would focus on acquiring licences in major financial jurisdictions “that are enacting clear rules” for the crypto industry. The European Union, UK, Canada, Brazil, Singapore and Australia were listed as near-term priorities.

The latest move is a part of the exchange’s expansion outside of its home country, where it has been struggling to gain regulatory green lights. It also faces a lawsuit that was filed in June by the US Securities and Exchange Commission (SEC).

The regulator alleged the exchange to have violated federal securities laws and accused Coinbase of operating as an unregistered securities exchange. The SEC listed 13 tokens as examples that it considered securities including Solana, Cardano and Polygon.

Recently, US state regulators lent support to the SEC in its case against Coinbase. The campaign was spearheaded by federal securities regulators where the state authorities and legal experts joined hands to argue that Coinbase operated as an unregistered securities exchange.

On the other side of things, a recent research report by Berenberg highlighted Coinbase’s weakening trading volumes in the US. According to the investment bank, it has slowed more than what was anticipated in the third quarter of the year.

The report stated that trading volume fell by around 17% sequentially for the exchange and by about 52% year-on-year. This weaker-than-expected trading volume was highlighted to be a
repercussion of the “persistent crypto winter”.

Reiterating their ‘hold’ recommendation on the COIN stock and maintaining a price target of $39, the analysts added: “We continue to view COIN’s consumer take rate as being at risk of compression due to competition for market share within a lower volume crypto space.”

Coinbase has had an office in Dublin since 2018 and employs approximately 100 people in Ireland.