REPORT: COINBASE AND IRELAND: Why Has The Popular Exchange Established Corporate Residency In Ireland

After Brexit, the UK is likely to remain the European hub for digital asset firms, but digital asset firms with offices only in the UK or firms entering the EU for the first time will have to establish an office in a European Union (EU) member state in order to maintain an EU-wide presence.

These firms will remain reluctant to establish offices in Ireland. The one major exception is Coinbase, which chose Dublin as its post-Brexit base in March, so it could continue operations and services in EU member states after the UK departs the EU in March 2019.1

Other digital asset firms have been hesitant to establish operations in Ireland for a number of reasons. Ireland has not enacted legislation that explicitly regulates digital assets, offerings or services. In addition, the Central Bank of Ireland (CBI) has expressed guarded acceptance of digital asset firms, and Irish banks have also been reluctant to conduct business with digital asset firms.

In March, the CBI released a discussion paper that signaled a change in Ireland’s position on digital assets. Since then, the CBI has established a FinTech “Innovation Hub” to assist firms in developing or implementing innovations in financial services based on new technologies.

These nascent efforts will not be enough to draw firms to Ireland in the short-term, as other EU member states are aggressively pursuing similar strategies.

Lack of a Comprehensive Legal Regime Enhances Regulatory Uncertainty

Ireland has not enacted laws or rules that explicitly regulate digital assets, offerings, and services. This provides digital asset firms that are operating in or considering operating in Ireland with a low degree of regulatory certainty.

Some existing laws apply to digital assets offerings or assets. For instance, if a token issued in an initial coin offering (ICO) is deemed to be a “transferable security,” a range of financial services legislation, including the 2014 European Union Markets in Financial Instruments Directive (MiFID II), will apply.2

In other instances, the specific classification and regulation of a digital asset or offering are determined on a case-by-case basis.3 The lack of clarity poses significant problems for digital asset firms, as issuers who do not adhere to the existing regulations are subject to legal penalty.4

Banks Deny Services to Digital Asset Firms

Digital asset firms ceased operation or were compelled to open foreign bank accounts after Irish banks refused their business.5 The Bank of Ireland explicitly stated that it does not offer services to digit asset companies.6

Allied Irish Banks (AIB) stated that it “does not discriminate” in providing banking services to digital asset companies, but AIB requires digital asset firms to ensure they are in full compliance with domestic AML/CTF laws and regulations before accepting them as clients.

The denial of banking services will likely continue until regulations are enacted that explicitly categorizes digital assets and clarifies the required AML/CTF, customer due diligence and reporting practices.

Virtual Currency and Blockchain Technology Discussion Paper Released in March

In March, the Department of Finance issued a discussion paper that signaled a fundamental change in the government’s approach to digital assets.

The key objectives of the paper include the proposal to create an intra-departmental working group to coordinate the approach to virtual currencies and monitor developments in blockchain technology, and the initiation of further research into the potential implications of digital assets and blockchain. The discussion paper also reiterates earlier concerns, namely risks to consumers and investors.7

The CBI’s Assessment of Digital Assets Has Shifted from Disapproval to Guarded Acceptance

The CBI contributed to the production of the European Securities and Markets Authority (ESMA) statement, published on 13 November 2017, which warned investors of the “high risks” associated with ICOs and virtual currencies. The statement by ESMA also cautioned investors that ICOs are “highly speculative investments” and, in some cases, investors “do not benefit from the protection” that comes with regulated investments.8

A month later, the Central Bank of Ireland (CBI) issued an “Alert on Initial Coin Offerings” that stated ICO investors should be aware of unregulated activity; fraud or illicit activities; the high risk of losing all invested capital; lack of exit options ; extreme price volatility; inadequate information; and flaws in the technology”.9

The CBI has recognized that it needs to incorporate emerging technologies, including digital asset firms, into its existing framework. In April, the CBI established an “Innovation Hub” that allows FinTech firms to engage with the CBI “outside of existing formal regulator/firm engagement processes.”10

The hub will allow digital asset firms to test products, services, business models and delivery mechanisms in a controlled environment.11

Legislative Hurdles Will Continue to Limit Digital Asset Activities

Ireland is actively competing with a number of European jurisdictions that have pursued a more aggressive regulatory path or have been more accepting of digital asset firms, including Estonia, France, Gibraltar, Isle of Man, Jersey, Lithuania, Netherlands, Luxembourg, Malta, Switzerland, and the UK.

Ireland maintains a number of advantages over some of these states, but without a comprehensive regulatory framework in place, the traditional strengths of Ireland, such as a favorable corporate tax regime, strategic geographical location, and a tech-savvy population, will not be sufficient to set itself apart from its European competitors.


  1. “Coinbase expands with new Dublin office,” Coinbase Blog, 15 October 2018, https://blog.coinbase.com/coinbase-expands-with-new-dublin-office-fc2e5ebcbeb6 (accessed 19 November 2018). Coinbase’s headquarters outside the U.S. will remain in London.
  2. “Tomorrow’s yesterday: financial regulation and technological change – Gerry Cross, Director of Policy & Risk,” Speech at Joint Session: Banknotes / Identity High Meeting 2018 Security Printers, International Conference & Exhibition Hosted by Intergraf, 20 March 2018, https://www.centralbank.ie/news/article/financial-regulation-and-technological-change-gerry-cross (accessed 19 November 2018).
  3. “Tomorrow’s yesterday: financial regulation and technological change – Gerry Cross, Director of Policy & Risk,” Speech at Joint Session: Banknotes / Identity High Meeting 2018 Security Printers, International Conference & Exhibition Hosted by Intergraf, 20 March 2018, https://www.centralbank.ie/news/article/financial-regulation-and-technological-change-gerry-cross (accessed 19 November 2018).
  4. “Tomorrow’s yesterday: financial regulation and technological change – Gerry Cross, Director of Policy & Risk,” Speech at Joint Session: Banknotes / Identity High Meeting 2018 Security Printers, International Conference & Exhibition Hosted by Intergraf, 20 March 2018, https://www.centralbank.ie/news/article/financial-regulation-and-technological-change-gerry-cross (accessed 19 November 2018).
  5. “Bitcoin sellers claim they are being denied banking services by Irish lenders,” The Irish Times, 21 June, https://www.irishtimes.com/business/technology/bitcoin-sellers-claim-they-are-being-denied-banking-services-by-irish-lenders-1.3537508 (accessed 19 November 2018).
  6. “Bitcoin sellers claim they are being denied banking services by Irish lenders,” The Irish Times, 21 June, https://www.irishtimes.com/business/technology/bitcoin-sellers-claim-they-are-being-denied-banking-services-by-irish-lenders-1.3537508 (accessed 19 November 2018).
  7. “Discussion Paper: Virtual Currencies and Blockchain Technology,” Department of Finance, March 2018, https://www.finance.gov.ie/wp-content/uploads/2018/03/Virtual-Currencies-and-Blockchain-Technology-March-2018.pdf (accessed 19 November 2018).
  8. “ESMA Alerts Investors to the High Risks of Initial Coin Offerings
    (ICOs),” European Securities and Markets Authority Statement, 13 November 2017, https://www.esma.europa.eu/sites/default/files/library/esma50-157-829_ico_statement_investors.pdf (accessed 19 November 2018).
  9. “Alert on Initial Coin Offerings,” Central Bank of Ireland Information Notice, December 2017, https://www.centralbank.ie/consumer-hub/consumer-notices/alert-on-initial-coin-offerings accessed 19 November 2018).
  10. “Innovation Hub,” Central Bank of Ireland, https://www.centralbank.ie/regulation/innovation-hub (accessed 19 November 2018).
  11. “Innovation Hub,” Central Bank of Ireland, https://www.centralbank.ie/regulation/innovation-hub (accessed 19 November 2018).