Gemini, a crypto trading platform founded by billionaire twins Tyler and Cameron Winklevoss, is close to receiving a license to operate from Malta, the smallest country in the European Union. Sources indicate that the pace of Malta’s approvals has drawn scrutiny from other national regulators, who meet under the auspices of the European Securities and Markets Authority (ESMA). France’s AMF has publicly warned that ESMA’s lack of direct authority could lead to a “regulatory race to the bottom.” Another senior regulatory official expressed concern about accepting licenses granted in countries where regulators had fewer staff, citing Malta as one example.
ESMA has scrutinized Malta’s licensing process, with a report due to be circulated soon. A spokesperson for the Malta Financial Services Authority stated that it had granted four crypto licenses to date and was able to move quickly due to its prior experience. The authority maintained that its local standards for combating money laundering were strict.
ESMA declined to comment. Luxembourg is expected to soon grant a license to Coinbase, the first U.S. crypto-focused company to join the S&P 500. While the application has been in progress for several months, sources pointed to the relatively modest size of Coinbase’s planned operation in Luxembourg.
Gemini nears regulatory green light
A Coinbase spokesperson did not comment on its application but stated that the company employs 200 people in Europe and has invested in staff to ensure operational safety. The spokesperson described Luxembourg as a “high-bar, well-respected global financial centre” and noted that Coinbase planned to hire more than 20 people there by the end of the year.
Luxembourg’s financial watchdog declined to comment. One person familiar with Luxembourg’s thinking dismissed any suggestion that the country was lax, saying some critics were instead motivated by self-interest in a race to attract crypto firms. Coinbase’s anticipated approval is seen as a setback for Ireland, where relations with the crypto industry have cooled.
In 2023, Central Bank Governor Gabriel Makhlouf compared crypto to a Ponzi scheme, warning that “most of the time when you gamble, you’re actually losing.
The global cryptocurrency market is currently valued at roughly $3.3 trillion, but it has faced crises, such as the collapse and fraud of top U.S. exchange FTX in 2022. The European Union has long had to contend with divergence between its members. The dispute is unfolding as European politicians consider granting greater powers to the European Securities and Markets Authority (ESMA).
While the European Union is united as a trading bloc and writes much of its regulation centrally in Brussels, countries compete with each other to attract international businesses. ESMA head Verena Ross has also pushed publicly for more powers to oversee crypto, although sources indicate that several countries remain skeptical.