The Central Bank of Ireland has taken enforcement action against Coinbase Ireland for failing to safeguard customer funds and maintain adequate oversight between 2020 and 2025. Safeguarding obligations are foundational for any regulated firm that handles customer money, with rules designed to keep customer funds separate from a company's own assets so they remain protected.

In a notice published on Thursday, Oct. 22, the regulator said the Coinbase unit had “admitted the prescribed contraventions and has agreed to the undisputed facts,” settling the matter with a $3.6 million fine. According to the notice, Coinbase Ireland breached regulations relating to oversight and the safeguarding of customer funds, and improperly relied on the exchange’s US-based company to outsource certain services. Outsourcing itself is permitted, but the regulatory expectation is that the licensed entity, not an external or affiliated service provider, remains accountable for how those functions are carried out.

The finding centers on the platform’s outsourcing arrangements. Coinbase’s user agreement%20in%20the%20context%20of%20outsourcing%20arrangements%20to%20help%20us%20provide%20the%20Coinbase%20Services%20in%20an%20efficient%20and%20qualitative%20manner.) currently states: “We use a variety of service providers (some belonging to the Coinbase Group and some not) in the context of outsourcing arrangements to help us provide the Coinbase Services in an efficient and qualitative manner.”

Karen O’Leary, the central bank’s director of enforcement, said in the notice that firms operating in Ireland “must have the appropriate culture and expertise to comply with the rules, respond to risks and to protect customer interests.” She added:

“This action against Coinbase Ireland underlines the Central Bank’s focus on ensuring that customers are at all times protected and that the integrity of the financial system is maintained.”

The sanctions against the Coinbase unit require approval from Ireland’s High Court before taking effect, a confirmation step built into the Central Bank’s sanctions process for regulated firms. That court sign-off is the remaining procedural step to watch before the agreed $3.6 million penalty formally takes effect.

Coinbase, a US-headquartered cryptocurrency exchange listed on the Nasdaq under the ticker COIN, launched its Irish operations in 2018. It received an e-money license from the Central Bank of Ireland in 2019 and secured registration as a virtual asset service provider in 2022, a status that brings firms within Ireland’s anti-money laundering framework. The conduct period, spanning 2020 through 2025, also covers the EU’s transition to the Markets in Crypto-Assets Regulation (MiCA), which has been fully applicable to crypto-asset service providers since December 2024.

Source: Cointelegraph