- Coinbase policy executive Tom Duff Gordon tells DL News why the exchange picked Dublin for its European hub.
- A Bitcoin ETF would drive institutional and retail investment money into the crypto market.
- Coinbase is ready to fight an SEC lawsuit in the US.
The crypto industry is giddy with anticipation that the US Securities and Exchange Commission is about to approve a spot Bitcoin exchange-traded fund.
It isn’t just a bull run that’s making investors happy — the advent of an ETF, the mainstream staple of retail investors, would be a milestone in the evolution of crypto as an asset class.
“A spot Bitcoin ETF would allow, not just more institutional money, but also more retail access and participation in the ecosystem,” Tom Duff Gordon, Coinbase’s international policy vice president, told DL News in an exclusive interview.
Silver linings
The crypto industry is reeling from a disastrous 18 months punctuated by the collapse of major exchanges, a bear market, and aggressive regulatory action against the industry in the US.
Even so, there are silver linings: The regulatory clarity championed by Europe in its landmark MiCA law is attracting the likes of Fidelity, and institutional money is flowing into the development of blockchain infrastructure, as well as new market products.
‘We are happy to continue to fight not just for us, but for the broader industry’
— Tom Duff Gordon, Coinbase
Global policy setters like the G20 have also agreed on high-level crypto guidelines for the world’s biggest economies to put in place.
A Bitcoin ETF on the horizon may spin the weathercock.
“All the big investment banks are beginning to experiment with this technology,” Gordon said. “We see the tokenisation of cash and real world assets becoming a real thing, and growing speculation around the potential approval of spot Bitcoin ETF.”
A side-effect of a spot ETF may be dampening Bitcoin’s notorious volatility, Gordon added. Bitcoin’s record of double-digit swings has long deterred more risk-averse investors.
For Coinbase, one of the world’s biggest trading exchanges for crypto, driving the mainstream adoption of decentralised, digital currencies is a key feature of its business model.
Earlier this year, Coinbase launched a blockchain on top of Ethereum to help scale up the DeFi ecosystem. The objective: onboard the first billion crypto users. And for that to work, a clear regulatory framework is essential, Gordon said.
Irish springboard
Gordon’s job is developing Coinbase in markets outside the US. Europe has provided an attractive market for expansion.
The European Union has quietly and steadily pioneered a crypto regulatory regime. Its 27 member states are currently in the midst of implementing the landmark Markets in Crypto-Assets rulebook, known as MiCA, which will establish the rules of the road for the industry.
More specifically, MiCA sets guardrails around stablecoin issuers and raises the bar for firms seeking a licence to offer crypto services to Europe’s 450 million people.
“Clear regulatory regimes like MiCA are a fantastic stimulus for investment from players like ourselves because that clarity gives us the rules of the road, and certainty around how we can invest,” Gordon said.
“The more we see regulation being rolled out across the different jurisdictions, the more we’re going to see activity and investment in [crypto].”
‘Our hope is to make sure that we have not just a single rule book, but also a common interpretation of those rules and a level playing field across the different member states.’
A perk for crypto firms looking to access the EU is MiCA’s so-called passporting provision. This means firms can pick one EU country in which to apply for a licence, and then use the nation as a springboard for accessing the rest of the bloc.
Earlier in October, Coinbase announced that Ireland will become its European hub once the new laws come into effect by the start of 2025. From Dublin, the exchange will be able to access the EU’s $17 trillion economy.
The Central Bank of Ireland, which oversees crypto firms, has “a great reputation,” Gordon said. Coinbase had considered several options in the EU before landing on Dublin, where it has had a presence since 2018.
“What we see in Ireland is support for the financial sector and technology,” he said, “with a lot of engagement from US firms.” In Dublin, Coinbase will rub shoulders with American giants including Google, Apple, and Meta.
The Ireland for Finance strategy launched last year featured FinTech and digital finance high on the priorities list, which helped Coinbase executives cement their decision.
After picking Ireland as its European headquarters, Gordon hopes for a level playing field across the bloc as MiCA looms.
“Our hope is to make sure that we have not just a single rule book, but also a common interpretation of those rules and a level playing field across the different member states, because MiCA leaves the supervision at the national level.”
Europe’s financial supervisors are now responsible for ironing out the details of how national authorities will need to enforce the MiCA laws, and are urging each country to make sure the transition is done in time to avoid companies from forum-shopping.
“How these rules are going to be kind of interpreted and filtered down is key to us,” Gordon said.
US crypto regulation
Across the Atlantic, the US Congress has struggled to produce legislation that would treat digital assets of all types as a separate asset class. Despite this, the US is fourth worldwide in crypto adoption, according to a recent global ranking.
Coinbase CEO Brian Armstrong has led the charge in pushing for regulatory clarity that would finally establish legal definitions for digital assets and recognise how different they are from stocks, bonds, and other traditional securities.
But now as the disgraced Sam Bankman-Fried stands trial and lawmakers decry the use of crypto by terrorists, the industry’s quest for tailor-made regulation seems further off than ever.
Influential crypto firms like Coinbase, Binance, and Ripple are embroiled in legal battles with regulators.
A strong case
In June, the SEC charged Coinbase with a five-count lawsuit alleging the exchange allowed users to trade unregistered securities.
Coinbase filed a motion on Tuesday seeking to dismiss the SEC lawsuit, although the exchange is ready to lay down “a strong case” in court if needed, Gordon said.
“We are happy to continue to fight, not just for us, but for the broader industry,” Gordon said.
Inbar Preiss is DL News’ Brussels-based regulation correspondent. Contact her at inbar@dlnews.com.