Gemini and Coinbase are set to receive operational licenses within the EU under the Markets in Crypto-Assets (MiCA) regulation.

Gemini, founded by the Winklevoss twins, is reportedly close to approval from Malta, while Coinbase expects to secure a license from Luxembourg.

These developments highlight differing approaches among EU regulators, with Malta facing scrutiny for its expedited approvals despite having previously licensed OKX and Crypto.com.

The European Securities and Markets Authority (ESMA) has raised concerns that inconsistent enforcement may undermine MiCA’s oversight goals.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ The strategic value of small financial centers in global crypto regulation

Malta and Luxembourg’s pivotal role in this regulatory debate illustrates a long-established pattern in European finance where smaller jurisdictions become specialized regulatory hubs.

Luxembourg previously established itself as Europe’s leading fund administration center, hosting over €5.9 trillion in assets under management despite its small size, while Malta strategically positioned itself as a cryptocurrency hub after successfully attracting online gambling companies1.

These smaller jurisdictions have consistently leveraged regulatory specialization as an economic development strategy. Malta’s defense that its “expedited processing” stems from “in-depth understanding acquired over these years” reveals how smaller jurisdictions convert regulatory expertise into competitive advantage in emerging financial sectors.

2️⃣ The EU’s push for regulatory coherence reflects post-crisis lessons

The current regulatory rift over cryptocurrency licensing echoes the EU’s post-2008 financial crisis experience, when fragmented national oversight contributed to systemic vulnerabilities.

The EU developed MiCA specifically to create a unified approach to crypto regulation after witnessing how regulatory inconsistency across member states created opportunities for regulatory arbitrage in traditional finance2.

MiCA represents the EU’s attempt to avoid repeating mistakes made during the 2008 crisis, when national regulators failed to coordinate effectively on cross-border financial institutions3.

ESMA’s push for greater centralized authority reflects a broader institutional pattern in EU financial regulation where initial frameworks often prove insufficient, requiring subsequent strengthening of supervisory powers.

The debate over whether to grant ESMA more power mirrors similar discussions that led to the creation of the European Banking Authority and ultimately the European Central Bank’s banking supervision role after the sovereign debt crisis.

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