Coinbase shifts focus back to Europe after return to Hawaii

Coinbase’s move to reenter Hawaii is reflective of a broader trend toward crypto regulatory clarity around the globe, Chief Policy Officer Faryar Shirzad told Blockworks.

Now able to offer its services in all 50 states, Coinbase shifts its focus back to the European Union and the United Kingdom, Shirzad added.

This isn’t Coinbase’s first foray into Hawaii. The company offered its products to the state’s residents years ago. But it left the state in 2017, after Hawaii — under its Money Transmitter License Regime — would have required Coinbase to maintain a fiat-equivalent balance for every crypto asset it held for clients.

“So essentially a two-for-one custody requirement,” Shirzad noted.

In 2020 though, the state’s Division of Financial Institutions partnered with the Hawaii Technology Development Corporation to create what they called the Digital Currency Innovation Lab (DCIL).

The DCIL invited crypto companies that would have needed a money transmitter license to conduct transaction activity without one. The initial 12 participants — selected in 2020 — included Apex Crypto, BlockFi Trading, Gemini Trust Company, ErisX and Robinhood Crypto.

“We had some peripheral involvement, but we weren’t a driver of the outcome,” Shirzad told Blockworks. “But we were obviously watching it and had always been very interested to re-enter the Hawaiian market.”

Then came the latest July 1 notice that a money transmitter license was no longer needed to conduct “digital currency/asset activity” in Hawaii.

“There’s an evolution occurring with crypto everywhere around the world where … the direction has been towards clarity, certainty, consistency and workability,” Coinbase’s chief policy officer noted. “So in a way Hawaii is part of a broader momentum we’re seeing everywhere.”

Now that Hawaii residents can trade hundreds of crypto assets via Coinbase’s app (and access services such as staking), Coinbase expects to next make headway in the EU and UK.

The focus on Europe comes with the EU’s Markets in Crypto Assets (MiCA) regulation set to come into force next year.

Roughly 80% of the global crypto trading market happens outside the US, Coinbase noted in a January blog post — highlighting its expansion progress and goals.

The company, in 2023, obtained licenses or registrations in Spain, France, Singapore and Bermuda. It also started up operations in Canada and Brazil with local fiat onramps and offramps.

Coinbase also has a crypto license in Germany and an electronic money institution (EMI) license in Ireland, Coinbase executives wrote in a June 25 response to the European Securities and Markets Authority (ESMA).

Policy Vice Presidents Tom Duff Gordon and Scott Bauguess noted in the response to ESMA that Coinbase is committed to making the EU one of its largest international markets outside the US.

“We believe we are well placed to transition to a MiCA license, and we are excited by the opportunities presented across the region,” they wrote. “The EU has taken a leadership role globally with MiCA, introducing the most comprehensive regulatory framework in the world.”

As for the UK, Coinbase is seeking a virtual asset service provider (VASP) registration there. The exchange has called on the country to become a Web3 and tokenization hub; draw up a comprehensive crypto regulatory framework; and deliver clarity on staking, among other suggestions.

“We are expecting progress with both MiCA and the UK VASP registration in the next six months or so,” a company spokesperson told Blockworks.

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