POLAND – 2023/08/01: In this photo illustration, a Coinbase logo displayed on a smartphone with stock server lights in the background. (Photo Illustration by Omar Marques/SOPA Images/LightRocket via Getty Images)
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Cryptocurrency exchange Coinbase secured registration with the French markets regulator, a company spokesperson confirmed Thursday, paving the way for the firm to expand its services in another key European market.
France’s AMF watchdog gave Coinbase a virtual asset service provider (VASP) approval, which is effectively a green light for the company to operate digital currency services in France.
The VASP registration will allow Coinbase to offer custody of digital assets, buying or selling digital assets in legal tender, trading of digital assets against other digital assets, and operating a digital asset trading platform, the company said in a statement Thursday.
French regulators, like others in Europe, have been playing catch-up with the emergence of new technologies like crypto and blockchain, balancing their potential in improving payment systems and trading while also looking to ensure consumers are protected.
The European Union has been working to introduce its Markets in Crypto Assets (MiCA) regulation, which would create a harmonized framework for crypto companies to operate in a regulated way in the bloc.
Under MiCA, rather than having to secure registration in every EU market, crypto companies will eventually be able to use their VASP license in one country and “passport” into other countries to offer their services across the EU.
The VASP registration represents a big move from U.S.-based Coinbase to expand in Europe, which comes at a crucial time with the exchange facing a more uncertain regulatory environment in its home country.
U.S. regulators have taken harsh actions against crypto companies lately. In November, the U.S. Department of Justice reached a settlement with crypto giant Binance which saw the company pay more than $4 billion while its CEO stepped down, pleading guilty to a felony charge that he failed to take steps to prevent money laundering at the firm.
The Securities and Exchange Commission, meanwhile, has led an aggressive campaign against the sector, targeting crypto companies with strict enforcement actions, including lawsuits against both Coinbase and rival Binance that allege the firms are engaged in illegal dealings of securities.
The SEC views several crypto tokens as being securities, a classification which would require them to seek registration with the watchdog. That would require copious transparency from companies and token issuers themselves, including financial disclosures and other paperwork.
Coinbase has fired back at the SEC, saying it has worked to ensure it is in compliance with financial regulations. The company is calling for new rules specifically for crypto in the U.S. to end what it has called “regulation by enforcement,” where the regulator is hitting companies with penalties in individual cases rather than setting clear rules for the road.
France has been positioning itself as a leader in technology lately, touting its prowess in technologies such as artificial intelligence and cloud computing, as part of President Emmanuel Macron’s bid to make the country a global tech hub.
The country has committed 34 billion euros ($36.5 billion) of investments, including subsidies and state funding, over five years as part of its “France 2030” plan, which aims to make the country a leader in and so-called “Web3,” among other things.
The country is home to Ledger, one of the biggest providers of crypto custody services, last valued at $1.4 billion. Separately, the likes of Circle, Binance and Crypto.com have all made Paris their European base. Only recently, Circle, which issues the popular stablecoin USD Coin, received its own French VASP license by the AMF.
France is seeing increased crypto adoption even as prices have taken a tumble in the wake of multiple bankruptcies and collapses.
According to data firm Toluna, 10% of French adults currently own crypto assets while 24% plan to buy, sell, or trade crypto in the next 12 months.