Amid intensifying hostility toward cryptocurrencies from American and British regulators, leading U.S. exchange Coinbase has obtained a key license from European authorities. This latest registration allows Coinbase to operate throughout the EU's massive common market.
Experts say Coinbase and other exchanges may pursue expansion in Europe to escape increasingly stringent rules in the United States and United Kingdom. The new registration comes as Coinbase's share price hovers near three-month lows.
Coinbase Registers as Crypto Service Provider in Spain
Coinbase, the largest U.S. cryptocurrency trading platform, has secured an anti-money laundering (AML) registration from the Bank of Spain. The registration authorizes Coinbase to provide a full range of digital asset services in Spain.
Nana Murugesan, Coinbase's vice president of international and business development, announced the registration in a blog post on September 23. "We are excited to have achieved this registration from the Bank of Spain to support and grow our retail consumers, institutional clients and developer partners in Spain," Murugesan said.
The Spanish registration allows Coinbase to offer cryptocurrency custody and trading services in the country. It also permits Coinbase to facilitate crypto-to-fiat transactions for Spanish residents.
Murugesan said attaining the license aligns with Coinbase's long-term approach: "Most of the world is stepping up to the plate and providing clarity and guidance for the crypto industry."
In addition to Spain, Coinbase has already secured digital asset provider registrations in Italy, Ireland, and the Netherlands. The exchange also received "in-principle" approval from Singapore's central bank earlier this year.
Exodus from US as Regulations Tighten?
For centralized crypto exchanges and custodians, operating in the EU common market requires registration under the bloc's anti-money laundering rules. With the Spain registration, Coinbase now has legal authority to provide services throughout the union.
Industry observers say establishing operations in crypto-friendly EU jurisdictions may become increasingly appealing for exchanges like Coinbase. Over the past year, regulators in the United States and United Kingdom have adopted aggressive stances toward digital assets.
In May, Coinbase registered a new Bermuda-based entity to serve non-U.S. clients. The Bermuda Monetary Authority will regulate that arm of Coinbase's operations. This structure allows Coinbase to operate more freely outside the United States.
Brian Armstrong, Coinbase's CEO, has criticized American officials for restrictive crypto policies. "The U.S. has always been a country that supports innovation and freedom," Armstrong wrote in June. "It would be really sad to see us move in the opposite direction, against innovation."
Lagging Share Price Despite New Market Access
Despite attaining expanded access to European markets, Coinbase stock has underperformed recently. COIN shares closed at $70.96 on September 23, down nearly 60% in the last three months.
The exchange has faced headwinds as crypto prices plunged for most of 2022. But analysts say extreme volatility also highlights the need for trusted crypto market infrastructure.
Mizuho analyst Dan Dolev wrote that Coinbase's long-term growth story remains intact despite short-term price swings. "While trading activity will likely remain muted in the near term, we don't believe this detracts from COIN's long-term opportunity," Dolev explained in a September 22 note.
Decentralization Can Check Unjust Regulation
Government distrust of cryptocurrency partly stems from the inability to control permissionless networks. Bitcoin runs on tens of thousands of decentralized nodes; no centralized entity can shut it down. Unlike private companies, decentralized protocols like Bitcoin exist beyond any single jurisdiction.
This censorship resistance addresses a key vulnerability of traditional finance. Centralized choke points allow governments to restrict financial activity. Through decentralization, cryptocurrency limits this control.
Of course, officials have valid reasons for regulating crypto intermediaries. Exchanges that hold user funds require oversight to ensure solvency and security. But decentralized networks with no intermediaries avoid this regulatory need entirely.
So decentralized finance protocols may gain appeal if oversight of centralized intermediaries becomes too onerous. Regulators should recognize this and adopt balanced policies that don't inadvertently drive activity from transparent exchanges to decentralized networks.
Long-Term Crypto Adoption Remains Inevitable
In the long run, government opposition is unlikely to stop cryptocurrency technology from reshaping finance. The core benefits of public blockchains – open access, transparency, censorship resistance – directly address the deficiencies of existing systems.
The printing press, radio communication, and the Internet all initially faced skepticism from authorities. But decentralized technologies that shift power to individuals have strong inertial forces behind them.
Attempts to halt cryptocurrency may temporarily dampen prices and usage. But blockchain-based value transfer is not a trend that will simply fade away. As Coinbase's expansion into Europe shows, crypto continually evolves to meet emerging challenges.
How Can Average Investors Navigate this Volatile Market?
For everyday investors, the extreme volatility in crypto markets over the past year presents challenges. The value of Bitcoin and other digital assets can swing dramatically in short periods. This makesattempts to time the market futile for most individuals.
Instead of trading actively, retail investors should focus on gradually accumulating crypto assets they believe in for the long term. Dollar cost averaging – making regular small purchases – helps smooth out volatility. And only investing money that can be locked away for years reduces stress.
Patience and an investment horizon of 5-10 years or more is appropriate for most cryptocurrencies. With prudent position sizing, HODLing high-quality assets through market swings can pay off handsomely.
What Areas of Crypto Industry Appear Most Promising?
While trading garners headlines, building blockchain infrastructure may be the most promising path going forward. Exchanges like Coinbase provide valuable on-ramps into crypto markets. And decentralized finance protocols offer novel financial services.
But enabling real-world business use cases is critical for mass adoption. Supply chain tracking, credential management, and data integrity are areas where blockchains can dramatically reduce costs and friction.
For example, enabling low-cost international payments for migrant workers or cross-border small businesses would tangibly improve millions of lives. Along with increased financial inclusion, blockchain technology can unlock trillions in underutilized capital around the world.
So companies and protocols focused on enabling these B2B, B2C, and C2C solutions have enormous growth runways ahead. With sound engineering and product-market fit, sustainable adoption at scale is achievable.