PARIS/FRANKFURT – Two major cryptocurrency firms are about to obtain licenses enabling them to operate throughout the European Union, amid increasing regulatory tensions as approvals ramp up across various nations.
The new Crypto-Assets Market regulations (MICA) implemented earlier this year allow EU member states to issue operational licenses valid within all 27 countries. However, there are growing concerns about the expedited process for these approvals.
With trillions of dollars in crypto industry transactions at stake, regulators have warned that inadequate oversight could lead to fraud, market instability, and illicit financial activities.
MICA is intended to integrate cryptocurrency under a regulatory framework similar to traditional finance, but fears linger that inconsistent enforcement might jeopardize this objective.
Gemini, a trading platform started by the billionaire Winclevos twins, is close to receiving a license from Malta, the EU’s smallest member. This comes after Malta granted licenses to OKX and, previously, Crypto.com, just weeks after the new regulations were enacted.
The rapid approval by Malta has attracted attention from other national regulators collaborating through the European Securities and Markets Authority (ESMA). The French regulator has raised concerns, warning that the lack of direct oversight from ESMA might lead to unhealthy regulatory competition.
One senior regulator, speaking anonymously, cited Malta as an example of concern regarding licenses issued in countries with less stringent oversight.
ESMA is currently evaluating Malta’s licensing procedures, according to a forthcoming report.
A representative from the Malta Financial Services Agency mentioned that they have issued four crypto licenses so far, highlighting that their efficient processing stems from accumulated experience. He also reassured that local anti-money laundering standards are stringent, although ESMA refrained from commenting.
OKX noted that their application is comprehensive and compliance is their main focus.
Meanwhile, regulatory discussions have intensified, especially around Luxembourg, where Coinbase, the first U.S. crypto-centric firm listed on the S&P 500, is seeking approval. This application has been in progress for several months, but the modest scale of Coinbase’s planned operations in Luxembourg was noted by an insider.
A Coinbase spokesperson didn’t provide details on the application itself but noted the hiring of 200 new roles in Europe to bolster operational security. Additionally, they stated that Luxembourg is a highly regarded global financial center, with plans to employ over 20 staff members by year-end.
Luxembourg’s financial watchdog declined to comment, while some familiar with the situation have pushed back against the notion that the country is lenient, suggesting instead that self-interest drives their efforts to attract crypto firms.
Coinbase’s potential approval is seen as a setback for Ireland, where crypto relations appear to be cooling. In a recent statement, the central bank governor made comparisons of crypto regulations to Ponzi schemes, expressing a rather skeptical outlook.
The global crypto market is currently valued at roughly $3.3 trillion, though it faces significant issues, including the infamous collapse of the FTX exchange in 2022 and ongoing fraud concerns.
The European Union has long grappled with internal discrepancies. As the situation unfolds, EU leaders are considering empowering ESMA further.
Although the EU operates as a consolidated trading entity with numerous regulations centralized in Brussels, there remains an ongoing competition among member states to attract international enterprises.
ESMA’s head, Verena Ross, has remarked on the skepticism among certain countries but advocates for enhanced regulatory authority regarding crypto oversight.
