Crypto Giants Set to Secure Licenses in the EU Amid Regulatory Disputes
Industry Leaders Gemini and Coinbase Poised for Regulatory Approval
PARIS/FRANKFURT — Two influential players in the cryptocurrency sector, Gemini and Coinbase, are on the brink of receiving licenses to operate within the European Union (EU), heralding a pivotal moment for crypto regulation in the region. This development occurs amidst increasing tension among EU regulators regarding the varying speeds and rigor with which certain countries are granting these essential licenses.
The EU’s Markets in Crypto-Assets (MiCA) regulation, which came into effect earlier this year, allows member states to issue licenses enabling crypto companies to operate seamlessly across the bloc’s 27 nations. However, concerns have surfaced in private discussions among regulators about the pace of license approvals, with some authorities expressing trepidation over the implications of hastily granted permits.
Concerns Over Regulatory Standards
Regulators fear that a lack of uniformity in enforcement could jeopardize the overarching goals of MiCA, particularly considering the potential risks associated with the billion-dollar cryptocurrency industry. These risks include fraud, market volatility, and illicit financial activities, prompting calls for stricter scrutiny to safeguard against potential abuses.
Among the companies in the spotlight is Gemini, a cryptocurrency exchange founded by billionaire twins Tyler and Cameron Winklevoss, which sources suggest is close to obtaining a license from Malta, the EU’s smallest member state. Malta has already granted licenses to other major players like OKX and Crypto.com shortly after the new regulatory framework was introduced, raising eyebrows among other national regulators who question the thoroughness of Malta’s licensing process.
Authorities under the European Securities and Markets Authority (ESMA) are deliberating concerns regarding Malta’s ability to uphold robust regulatory standards, especially given the country’s smaller regulatory staff compared to its peers. In a recent public statement, the French Financial Markets Authority (AMF) cautioned that an absence of oversight by ESMA could lead to a "regulatory race to the bottom," further complicating the EU’s crypto regulatory environment.
Coinbase’s License Application in Luxembourg
In parallel with Gemini’s anticipated approval, Coinbase is reportedly nearing the end of its license application process in Luxembourg. As the first U.S.-based cryptocurrency company to be listed on the S&P 500, the approval of Coinbase would mark a significant milestone for the firm, as it seeks to expand its European operations.
Although its license application has been ongoing for several months, the scope of Coinbase’s planned operations in Luxembourg is described as modest. A spokesperson for the company refrained from commenting on the application specifics but reiterated its commitment to compliance and safety, contending that it employs approximately 200 staff across Europe and aims to hire over 20 more in Luxembourg by year-end.
The Luxembourg financial regulator did not comment on the status of the application, but sources familiar with the situation allege that criticisms aimed at the country’s regulatory framework may stem from a desire among other nations to attract crypto businesses for themselves.
Tensions Among EU Member States
The news surrounding the impending approvals for Gemini and Coinbase emerges against a backdrop of mounting tensions within the EU over how best to regulate the cryptocurrency sector. The divergent approaches of member states have led to discussions about enhancing the powers of ESMA to oversee crypto activities, although some countries demonstrate caution regarding this centralization.
Verena Ross, head of ESMA, has publicly advocated for broader regulatory authority, yet skepticism persists among several member states concerning the efficacy and necessity of such powers.
These developments occur within the context of a cryptocurrency market currently valued at approximately $3.3 trillion, which has faced significant challenges in recent years, including high-profile failures like the collapse of the FTX exchange in 2022. In summary, as Gemini and Coinbase edge closer to regulatory approval in the EU, the ongoing debate among national regulators highlights the complexities of creating a cohesive and effective framework for the burgeoning cryptocurrency industry in Europe.