Coinbase chooses Ireland as its primary EU regulatory base amid increasing U.S. regulatory scrutiny.

• Coinbase, a cryptocurrency exchange, has selected Ireland as its primary operational and regulatory center in the European Union, according to an exclusive statement to CNBC.
• Since 2018, Coinbase has maintained an office in Dublin and currently employs approximately 100 individuals in Ireland.
• If Coinbase obtains a "MiCA license" in Ireland, it will be able to use it to expand its services into Germany, France, Italy, the Netherlands, and other EU countries.
• Coinbase is looking towards growth opportunities in the European Union, which has a population of 450 million, and other international markets as it faces regulatory challenges in its home country.

The cryptocurrency exchange has selected Ireland as its primary operational and regulatory center in the European Union, as stated in an exclusive interview with CNBC.

Coinbase applied for a license under the EU's MiCA regulation, which will be enforced by December 2024, with the Central Bank of Ireland.

Since 2018, Coinbase has maintained an office in Dublin and currently employs approximately 100 individuals in Ireland.

If Coinbase obtains a "MiCA license" in Ireland, it will be able to use it to expand its services into Germany, France, Italy, the Netherlands, and other EU countries.

Coinbase is confident it will obtain the necessary license to launch new products in those markets without having to apply for individual licenses in each country.

Coinbase's vice president of international, Nana Murugesan, stated in an interview with CNBC that the company intends to begin operations with its MiCA license on the first day.

What is MiCA?

The EU's MiCA aims to establish a unified regulatory framework for crypto companies, providing safeguards for investors trading in crypto assets such as bitcoin and ethereum.

Crypto companies will be able to use a single license to operate in all 27 EU member states under new rules.

Crypto exchanges are required by regulation not to mix client funds with their own assets.

We had been considering several member states before MiCA was passed into law, and Ireland's engagement throughout the decision-making process was very impressive, as Murugesan stated.

We needed to select a member state that is both an experienced regulator of financial services and recognizes the importance of a globally integrated business model, our company structure, and the potential of the innovative new technology.

In Ireland, Coinbase holds an electronic money institution license and virtual asset service provider registration. Additionally, the company has a crypto license in Germany and national registrations in other EU member states, including Italy, the Netherlands, and Spain.

U.S. lawsuit

One of the largest crypto trading venues worldwide is based in San Francisco.

The crypto industry is facing challenges with declining volumes and slowed fundraising as macroeconomic conditions worsen and regulatory scrutiny intensifies.

Coinbase is looking towards growth in the European Union, a continent with a population of 450 million, and other international markets as it faces regulatory pressure from the US Securities and Exchange Commission, which has accused the company of operating an illegal securities exchange.

Coinbase disagrees with the SEC's assertions and is engaged in legal action. Nevertheless, its objective is to establish formal cryptocurrency legislation instead of continuous court battles.

Coinbase's chief legal officer, Paul Grewal, stated that the progress towards achieving crypto regulation in the U.S. has been "slower" than desired. However, he remains optimistic about the prospect of obtaining more regulatory clarity in the future.

In court cases, real questions are being raised about the U.S. approach to crypto regulation, specifically securities regulation. Judges are challenging the SEC's interpretation of US securities laws and questioning whether tokens are securities.

MiCA, in contrast, offers a more substantial and serious approach to crypto regulation by focusing on keeping consumers and investors safe, rather than being caught up in the jurisdictional fights and turf battles that the United States often experiences over whether certain transactions are considered securities, commodities, or something else entirely.

While the use of digital assets is more widespread in the U.S., Central, Northern, and Western Europe is the second-largest crypto economy globally, according to Chainalysis data. Despite this, Coinbase anticipates significant growth in the region.

Coinbase has earned up to 20% of its top line revenue from across Europe in recent quarters, according to Grewal, who spoke to CNBC's Arjun Kharpal. The firm reported $808.3 million of sales globally in the second quarter of 2023, according to its latest earnings report.

We will approach the opportunity in a responsible and measured way, allowing our customers to drive our investments and focus on pursuing the best opportunities. It's an exciting future.

Coinbase has chosen Germany as its regional "talent hub" and plans to increase its hiring in that market to customize its product for the German market.

Murugesan expressed gratitude to Germany for their support, stating that their German operation has grown significantly and more than doubled in headcount.

EU-first approach to products

Murugesan stated that Coinbase might introduce new products in Europe prior to launching them in the U.S.

Coinbase will use the EU as a "testbed" to consider the "utilitarian" functions of crypto that people require in their daily lives, such as payments and transacting rather than trading, as stated by the company's CEO to CNBC.

By utilizing MiCA and its clarity, we can innovate and potentially introduce daily use cases in the EU first.

Coinbase's EMEA vice president, Daniel Seifert, stated that the company plans to introduce integrations with other payment providers to facilitate easier access to digital tokens for users.

In the upcoming weeks and months, the region will witness many thrilling plans, as stated by Seifert.

— CNBC’s Arjun Kharpal contributed to this report

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