Major US cryptocurrency exchanges Gemini and Coinbase are poised to receive licences giving them the ability to operate across the European Union under rules that came into force earlier this year, but the speed of approvals is creating a rift among EU regulators, Reuters reported.

Gemini is expected to receive a licence from Malta and Coinbase from Luxembourg in the near future, the report said.

Under the EU’s pioneering Markets in Crypto-Assets (MiCA) regulation, which came into force earlier this year, licences granted by a member state allow firms to operate across the bloc.

Crypto licensing

The rules, which were the world’s first comprehensive regulations addressing the crypto market at the time that they were initially agreed in 2023, are designed to create a framework for stability and transparency for an industry that has seen wild fluctuations and crises while being accused of facilitating money-laundering, fraud and other crime.

But EU member state regulators have raised concerns in closed-door meetings over the speed with which licences are being granted, according to unnamed people cited in Reuters’ report.

Malta, the EU’s smallest country, earlier granted approvals to OKX and Crypto.com within weeks of MiCA coming into force.

A senior regulatory official told the news agency that they were concerned about accepting licences granted in countries where regulators had fewer staff, giving Malta as an example.

The European Securities and Markets Authority (ESMA) has scrutinised Malta’s licensing process and is expected to circulate a report in the near future, one of Reuters’ sources said.

The Malta Financial Services Authority said it has granted four crypto licences so far and that its “expedited processing” was due to the “in-depth understanding” it has acquired from past experience, adding that its money-laundering standards are strict.

Regulatory scrutiny

Coinbase’s application has been in progress for several months but one person raised concerns over the small size of the company’s planned operation in Luxembourg.

Coinbase said it employed 200 people in Europe and planned to hire 20 staff in Luxembourg by the end of the year.

The White House has been loosening regulatory control over the crypto industry this year, ending Biden-era lawsuits against Coinbase and others by the Securities and Exchange Commission that sought to force crypto firms to comply with existing securities regulations.

The US as yet has no financial rules tailor-made for digital assets.

Cryptocurrency values have risen to new highs in recent months boosted by the White House’s backing, but have continued to be highly volatile, most recently plunging on Friday after Israel and Iran fired missiles into one another’s territories.