Coinbase has shortlisted Ireland as a potential location for its new regulatory hub once the European Union implements a wide-ranging set of regulations for digital assets, the crypto exchange’s new Irish boss has said.
If selected, it could result in an “uplift” in staffing at the Nasdaq-listed company’s offices in Dublin, according to former Deloitte Ireland director Cormac Dinan, who was named country lead for Coinbase’s Irish operations late last year.
Coinbase, which now employs some 130 people in Ireland, has shed more than 100 Irish jobs in the past 12 months as part of a wide-ranging global cost-cutting initiative occasioned by the unprecedented turmoil that has gripped crypto markets. But shares in Coinbase have soared more than 100 per cent in the past two months in line with a broader sectoral bounce this year, which has seen crypto asset prices rebound after dramatic declines in 2022.
Mr Dinan also said that the implications of the US Security and Exchange Commission’s latest crackdown on digital assets on Coinbase’s revenues will take some time to become fully evident.
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On Wednesday, Wall Street’s top regulator said it was considering new rules that would clamp down on platforms offering rewards to their customers – both individual retail investors and larger, institutional investors – through a process called staking.
Coinbase and other crypto exchanges, like Binance and Kraken, offer the service to investors for a fee, essentially allowing customers to lock up their assets and earn passive income in the process. Bloomberg reported this week that Coinbase was in line to generate revenue of roughly $450 million this year from the service.
Regulator’s review
Following an investigation into Kraken, the SEC reached a $30 million settlement with the exchange recently and won agreement to shut down those offerings domestically. The regulator is now looking at expanding its rules to force investment advisers to secure all the client assets, including crypto assets, with qualified custodians, usually highly regulated financial institutions like banks.
Mr Dinan said: “The revenue implication is probably something that we wouldn’t have first-hand, 100 per cent knowledge of. But the other side of it is, what you’re probably seeing from the US side of things, is that it demonstrates the importance of having the right regulation around crypto and crypto financial services because the current regulations in the US don’t really fit it.”
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He said that Coinbase Ireland is “very much looking forward” to the implementation of the EU’s Markets in Crypto Assets (MiCA) regulations, a wide-ranging framework for the as yet largely unregulated industry.
Mr Dinan said Ireland is on a shortlist of European locations from which Coinbase is looking to “passport” its services into other EU countries once MiCA is implemented later this year.
“The reasons for that are wide and varied,” he said. One reason is that the “ecosystem of talent” here, given Ireland’s reputation in the global funds and financial services sector generally.
“And I think the other thing is that the Central Bank of Ireland is very reputable,” he said. “There’s a lot of partners for us, a lot of customers, a lot of institutional clients who would much prefer to see us regulated by the Central Bank than other regulators.”
Mr Dinan added: “I would imagine there will be an uplift in terms of jobs [to] support the new regulatory operations that will be required. And so again, essentially, we will have more to do from a regulatory perspective. So yeah, I do so a bit of an uplift in terms of jobs above what we have today and I think we will probably know in the next couple of months.”
