Luxembourg

In brief

• Gemini and Coinbase are set to receive EU licenses allowing operation across all 27 member states.
• EU regulators are concerned about smaller countries rapidly approving licenses for major exchanges.
• Experts warn differing standards could create a “race to the bottom” undermining consumer protection.

Two of the world’s largest crypto exchanges, Gemini and Coinbase, are set to receive licenses that would permit them to operate across the entire European Union.

Reuters reports that Gemini, owned and co-founded by Tyler and Cameron Winklevoss, is on the verge of receiving an operational license from Malta, after the small Mediterranean nation granted licenses to rival exchanges OKX and Crypto.com in January this year.

Meanwhile, Luxembourg is reportedly in the final stages of approving a license for Coinbase. The company is also planning to open an office in the country later this year, where it plans to employ at least 20 staff.

This is potentially a much more significant move than it would have been just a few years ago. Following the introduction of the Markets in Crypto-Assets regulation (MiCA) in April 2023, a license to operate in one EU member state grants the holder the right to operate in all 27, gaining access to the pan-European market in the process.

This is due to a process known as “passporting,” and it means other European nations lose the ability to block Crypto-Asset Service Providers, or CASPs, once they’re licensed to operate in another member state. But there is a carve out for instances where there’s a firm legal basis.

Regulators voice concerns

Some EU regulators raised suspicions about the nature of these types of related rapid approvals. One unidentified senior regulatory official told Reuters that the European Securities and Markets Authority, or ESMA, was concerned about accepting licenses granted in countries where regulators have fewer staff. ESMA is currently analyzing Malta’s licensing process, with a report expected to be released.

A spokesperson for the Malta Financial Services Authority said its ability to grant approvals quickly is due to “in-depth understanding acquired over these years” and added that it has strict standards regarding the prevention of money laundering.

Concerns were also expressed about Luxembourg’s decision to grant a license to Coinbase, with one anonymous source highlighting the relatively small size of Coinbase’s planned footprint in the country. Luxembourg’s officials did not comment on the potential approval.



Peter Curk, CEO of UK crypto portfolio management platform ICONOMI, told Decrypt that though the MiCA was originally designed to harmonize crypto oversight, “if regulatory capacity differs across member states, we risk a ‘race to the bottom’ in standards, diluting consumer protection and cross‑border trust.”

“Europe’s challenge is balancing agility with the depth of scrutiny,” said Curk. “The debate isn’t just about licenses, it’s about the EU’s collective reputation in digital finance.”

“National competition is healthy, but not at the expense of regulatory cohesion,” he added, suggesting that granting EMSA more oversight powers would signal high collective standards on behalf of the EU and improve MiCA’s credibility in the world of finance.

The CEO suggested that if EU member states treat MiCA as “a license arbitrage opportunity,” they risk ultimately sending business to other regions like the U.S..

Edited by Stacy Elliott.

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