Coinbase and Gemini, two significant players in the cryptocurrency exchange arena, are on the cusp of obtaining licenses to operate throughout the European Union. This development comes as a variety of regulatory inconsistencies emerge among EU member states.

Coinbase and Gemini Pursue EU Regulatory Licenses

According to reports, Gemini, launched by the Winklevoss twins, is likely to receive a pivotal license from Malta, the EU’s smallest nation. This move follows Malta’s prior successful licensing of other cryptocurrency entities such as OKX and Crypto.com.

Similarly, Coinbase is nearing the finish line for a license in Luxembourg, positioning itself as the first crypto exchange from the US to secure a license under revised EU regulations.

While the licensing application process has extended over several months, sources close to the matter reveal that Coinbase’s operations in Luxembourg might initially be “fairly modest.”

A company spokesperson informed reporters that Coinbase currently employs about 200 people across Europe, highlighting an ongoing commitment to enhance staff capabilities for operational security.

The expected approval for Coinbase aligns with a backdrop of deteriorating relations between the cryptocurrency sector and Ireland, where skepticism about crypto has intensified, with officials comparing it to a Ponzi scheme.

Despite this, the overall licensing framework has faced scrutiny from multiple national regulators unhappy about the brisk pace and thoroughness of approvals.

Regulatory Concerns Surround Fast-Tracked Licensing

The newly introduced Markets in Crypto-Assets (MiCA) regulation aims to synchronize cryptocurrency operations within the traditional financial oversight landscape, allowing member states to issue licenses for crypto firms operating across the bloc of 27 countries.

Regulators highlight concerns that lenient enforcement could jeopardize the intended regulatory framework, potentially paving the way for issues like market fraud and instability.

The rapid issuance of licenses in Malta has prompted concerns among various EU regulators, particularly those convening under the European Securities and Markets Authority (ESMA).

France’s Autorité des Marchés Financiers (AMF) has issued a warning that insufficient supervision from ESMA might result in a “race to the bottom” in regulatory standards.

Additionally, questions have been raised regarding the regulatory workforce in countries like Malta, which could hinder the strength of their licensing protocols.

In defense, the Malta Financial Services Authority countered that its swift licensing procedures are based on established experience and adherence to stringent anti-money laundering measures. Up to now, Malta has granted four crypto licenses since the MiCA regulations rolled out.

The ongoing dialogues within the EU underscore the intricate interplay between member states competing for global business opportunities. Though the EU stands as a unified trading bloc, individual nations often clash over attracting crypto firms, resulting in regulatory discrepancies.

Image courtesy of Shutterstock, chart provided by TradingView.com.