Major Financial Hubs Now Providing More Regulatory Clarity on Crypto, Coinbase Report Claims

As momentum for crypto builds around the world, Coinbase (NASDAQ:COIN) is executing on Phase II of their “Go Broad, Go Deep” strategy for international expansion.

Coinbase says that it sees the following: 1) enactment of clear rules; 2) innovation of more efficient, more accessible products and services; and 3) user trust created through these products and services as their formula for long-term growth.

According to Coinbase, momentum is building “for the regulated, responsible use of cryptocurrency as countries race to become crypto hubs and reap the economic and other competitive benefits of serving the world’s digital asset holders—now 420 million and counting.”

As noted in a blog post by Coinbase, 83% of G20 members and major financial hubs “have made progress toward regulatory clarity for crypto.” The result is “an emerging global framework for updating the financial system in ways that increase economic freedom and opportunity.”

Europe is leading the way. In April 2023, the European Union “adopted its Markets in Crypto-Assets (MiCA) regulation, bringing regulatory clarity to all 27 EU countries and giving the crypto industry confidence to invest in the region.”

Italy, the Netherlands, and Ireland have also “granted us VASP registrations in the last year alone, while Germany granted us its first crypto license in 2021.” Thanks to its crypto-forward approach, Europe now “claims two thirds of the world’s blockchain jobs, 68%, versus 14% apiece for Asia and North America, and is at parity with the United States in share of developer jobs at 29%.”

Coinbase is doing their part “to update the financial system by proactively keeping pace with governments as they embrace crypto.”

Where they believe regulations “are clear and sensible, they can work more closely with regulators to receive the authorizations they need to offer our products and services and update the system.”

They see the “enactment of clear rules; innovation of more efficient, more accessible products and services; and user trust created through these products and services as our formula for long-term growth.”

This formula has produced meaningful progress, “including in 90% of their ‘Go Broad, Go Deep; international markets where we’ve focused our efforts over the last year.”

Introducing Phase II of their international expansion

Coinbase noted that they are “announcing ‘Phase II” of their Go Broad, Go Deep strategy to further operationalize this formula and diversify our business across the world, keeping pace with government engagement with crypto. Building on the past six months of successful work, Phase II will consist” of the following:

  • Focusing on acquiring licenses, registering, and establishing and strengthening operations in ”Go Deep” markets that are enacting clear rules. Near-term priority markets include Europe (EU and UK), Canada, Brazil, Singapore and Australia. We’re in the final stages of selecting the location of our MiCA hub in the EU.
  • Expanding “Go Broad” products and services around the world, with the support of forward-looking regulators. This includes derivatives: International Exchange recently launched in Bermuda with the Bermuda Monetary Authority. Coinbase Wallet will also continue to make Web3 exploration safer, more secure and more accessible around the world.
  • Establishing partnerships and initiatives with banks, including both global systemically important banks and local institutions, payment providers to expand on- and off-ramps, strategic players, start-up ecosystems, and culturally relevant brands.
  • Assuring that our governance and systems are compliant in every country where they operate (e.g., expansion of Travel Rule Universal Solution Technology in jurisdictions with Travel Rules).
  • Engaging the community through events and thought leadership to help leverage their being the most trusted brand in the crypto space ahead of the European elections in June 2024.
  • Working with G20 members and major financial hubs to help build consensus and create global standards for their industry. Coinbase will start keeping a scorecard on the regulatory progress with crypto in each of these countries and jurisdictions. Brazil taking the G20 chair in December 2023 presents a significant opportunity to maintain and help direct this momentum. Coinbase recently launched in Brazil as well as Canada, and our co-founder and CEO Brian Armstrong will visit both countries late this year to engage with key decision-makers and stakeholders, as we engage on the G20 agenda and strengthen our presence in the Americas.

Momentum for clear rules across the world

In the six months since we accelerated our Go Broad, Go Deep strategy, we’ve seen positive developments at local, regional and global levels:

The European Union formally “adopted its Markets in Crypto-Assets (MiCA) regulation, providing regulatory clarity to the EU’s 27 countries.”

MiCA will go into effect in late 2024. Already, across the bloc, Coinbase has “an existing e-money license and VASP registration in Ireland, a crypto license in Germany, and VASP registrations in Italy and the Netherlands.”

The UK has sent a powerful signal “that it is open for business to crypto asset firms and is putting this into action.”

With the Financial Services and Markets Bill completing its passage through Parliament, and the Treasury’s recent consultation paper, the UK is “on track to produce its own framework for crypto, providing important legal and regulatory certainty to the market.”

The UAE is eager to become “a global crypto hub; 28% of its population owns crypto. All three of its regulators have developed frameworks to make this happen, and its Deputy Prime Minister launched the annual Dubai FinTech Summit last May, headlined by Brian, our co-founder and CEO.”

Australia, one of the few countries to have “added blockchain jobs in the past year, undertook a comprehensive token-mapping consultation, led by the Treasury, and a crypto licensing framework is expected this month.”

Canada implemented “a Pre-Registration Undertaking (PRU), to which Coinbase signed up in March this year, and we continue to work with the local regulators on developing a strong crypto regulatory framework for Canadians.”

Signing the PRU means that we have agreed to meet the stringent regulatory requirements.

Hong Kong developed “a crypto regulatory framework that just went into effect in June. This represents a major pivot towards digital assets.” Officials have declared support for the sector, stating that “the next wave of breakthrough growth will likely be powered by Web3 and blockchain technologies.”

Japan has declared its intention to create “an environment conducive to promoting Web3.”

The Prime Minister has included Web3 as part of his administration’s “new capitalism” economic policy, “designed to solve social issues by driving growth and innovation.”

At the global level, standard-setters working “toward guidelines include the International Organization of Securities Commissions, Financial Stability Board, International Monetary Fund, the Bank of International Settlements, and the G20.”

The G20 under India’s presidency—India being “home to the most crypto owners—is expected to approve a set of principles this month to help its members align on basic guardrails, including the US. Incoming G20 president Brazil is expected to maintain this crypto-forward approach.”

Every part of the world is seeing progress on crypto-forward regulation—except for the US, which is opting for a “strategy” of enforcement of existing rules and new regulation through the courts.

By sidelining itself while so many advanced and emerging economies move ahead, the US risks forfeiting its influence “over the future of the financial system.”

It already has lost significant share “in developers in recent years, from 40% to 29%, and could lose out on as many as 1 million developer jobs to other countries.” It also lost the most blockchain jobs of “any country from 2022 to 2023.”

From the Middle East to Latin America, “with their significant populations of crypto owners, and across Europe with its leadership in blockchain jobs, regulators are doing what they were elected or appointed to do: serving their citizens by enabling both innovation and consumer protection, and positioning themselves for the future. In the US, however, despite being home to one in 10 of the world’s 420 million crypto users, crypto’s primary regulator wants to take the country in the other direction.”

Co-founder and CEO Brian Armstrong chose “to build Coinbase in the US believing that the US should be at the forefront of efforts to update our financial system and make it faster and more accessible. Coinbase is a public company in the US because we believe the US would best be served by embracing this fundamental innovation.”

However, they’re committed “to helping to update the global financial system and providing more economic freedom and opportunity, and won’t stand idle just because the US is. In the six months since they accelerated our international expansion plan, we have executed on our three-part formula which we believe will deliver sustained, long-term growth.”

  • Working closely with regulators who enact clear rules: We launched operations in the crypto-forward markets of Singapore, Brazil and Canada to strengthen our presence and business in APAC and the Americas.
  • Through partners, expanding our innovation of more efficient, more accessible products and services: We ushered in a new era of stablecoins with global reach, such as USDC with Circle; made it easier to self-custody and convert to local fiat currencies with Block; advanced the vision of a decentralized on-chain economy with Optimism Collective; and drove cultural relevance with brands (e.g., Borussia Dortmund in Germany).

And as mentioned above, they also launched Coinbase International Exchange, allowing consumers in eligible jurisdictions outside the US “to trade perpetual futures with the necessary protections and high-caliber technology.”

User trust created through these products and services:

“We introduced easy bank transfers with FAST bank transfers in Singapore; integrated payments by Pix, the payments platform of Brazil’s Central Bank; integrated Interac payment rails in Canada; and integrated PayPal payments for our German and UK users.”

As stated by the firm:

“Coinbase still believes that the crypto sector and the US government should be working as allies to reform our financial system, including by providing the kind of clarity and certainty now seen from many other governments around the world. In the absence of US participation, we’ll continue our efforts with other governments to work within their rules to offer the most trusted services and products that make our financial system more efficient and accessible.”

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