Crypto revolution: Gemini and Coinbase apply for EU licenses!

Crypto revolution: Gemini and Coinbase apply for EU licenses!

Crypto exchanges Gemini and Coinbase have now applied for licenses to operate in the European Union. This measure is in line with the EU Markets in Crypto Assets (MiCA) Regulation, which aims to create uniform regulation within the EU. Gemini is seeking approval in Malta, while Coinbase is awaiting a license in Luxembourg. A Coinbase spokesperson described Luxembourg as a “respected global financial center” but did not comment on the details of the application. In doing so, Gemini and Coinbase are following the example of other large exchanges that also want to operate within MiCA. For example, Bybit recently received approval to operate in Austria, and Binance updated its processes in Poland to comply with MiCA regulations.

MiCA's regulations came into force in June 2024, while full implementation only took place in December of the same year. The European Securities and Markets Authority (ESMA) has now issued final guidelines for EU member states. The primary aim of the MiCA Regulation is to strengthen investor protection and promote financial stability in the Union. Nevertheless, there are concerns about the regulations surrounding stablecoins as they leave a lot of room for interpretation and uncertainty.

Dispute over stablecoins

A controversial provision within MiCA requires stablecoin issuers to hold a “significant” portion of their reserves in European banks. Tether has rejected this, fueling debate about the future of such crypto assets. Nevertheless, at least ten other stablecoins, including those from Circle, Crypto.com and Société Générale, were approved under MiCA. Patrick Hensen, managing director of Circle, reported that 10 companies in the EU have been allowed to operate stablecoins since February.

However, indications are that adoption of stablecoins under MiCA is low. In Italy in particular, according to Fabio Panetta, it has been noted that MiCA has not led to a significant spread of stablecoins. Instead, market players’ interest has shifted to “custody and trading services.”

Regulatory framework and challenges

The MiCA regulation aims at risk-based regulation and thus promotes innovation in the area of ​​distributed ledger technology. A key element of MiCA is that crypto asset providers are now required to produce a white paper and submit this to the regulatory authorities. Authorization is required for the public offering of e-money tokens and asset-referenced tokens, and services involving cryptoassets are subject to authorization.

In Germany, for example, many transactions with crypto assets have to obtain this permission from the national supervisory authorities. The European Supervisory Authorities, including BaFin, are already actively implementing the technical regulatory and implementing acts and guidelines for MiCA to both ensure investor protection and provide legal certainty for innovation in the crypto sector. A publicly accessible register will also be set up that documents the white papers from crypto asset providers.

MiCA defines three categories of cryptoassets: e-money tokens, asset-referenced tokens and utility tokens. Common cryptocurrencies such as Bitcoin and Ethereum fall under this regulation, while security tokens and NFTs are generally not covered. Providers with more than 15 million active users are considered significant players and are subject to stricter requirements and controls.

The new anti-money laundering regulations, including the “Travel Rule”, are also being implemented across the EU and require users to be identified when transferring money. This also applies to transactions between “hosted” and “unhosted wallets”, especially for amounts over 1000 euros. As market developments show, crypto exchanges are now faced with the challenge of navigating a dynamic and ever-changing regulatory environment.