The Central Bank of Ireland has issued a €3.25 million ($3.65 million) fine against Coinbase Ireland Limited for breaches related to the safekeeping of customer funds and for relying on its US parent company for compliance functions that should have been locally managed.
Details of the regulatory action
The regulator revealed that the fine followed a settlement reached with the Coinbase subsidiary, concluding enforcement action for violations that occurred between November 2020 and August 2025 under Ireland’s Electronic Money Regulations.
Coinbase Ireland Limited, an e-money institution, is responsible for managing euro and dollar balances for European customers transacting in crypto assets on Coinbase’s platform. Irish regulations require these customer balances to be held in separate safeguarding accounts, completely segregated from company funds and customers of other Coinbase entities.
The Central Bank identified three key failings by Coinbase Ireland. The first was an “excessive reliance” on its US-based group for designing and operating safeguarding controls, without having the required local expertise to oversee those systems.
Secondly, the company’s safeguarding account was underfunded for extended periods, attributed to inadequate system design and insufficient control testing. Third, Coinbase Ireland did not have sufficient mechanisms to notify the regulator about significant changes in its safeguarding arrangements.
Karen O’Leary, director of enforcement at the Central Bank, emphasized that Coinbase Ireland had promised “robust and automated safeguards” when applying for authorization in 2019, but failed to maintain or communicate changes to those safeguards. O’Leary stated that payment and e-money firms must fully protect customers’ funds and that weaknesses in safeguarding are not tolerated.
“Failing to adhere to the assurances made during the authorisation process or to inform us of material changes as happened in this case is completely unacceptable. Payment and e-money firms have a fundamental obligation to fully safeguard customers’ funds. The Central Bank has made its supervisory expectations in this regard clear: we have no tolerance for weaknesses in safeguarding arrangements.”
The Central Bank had set a base penalty of €4.65 million but applied a 30% reduction due to the settlement agreement. The fine and censure require confirmation from Ireland’s High Court. This marks the regulator’s 164th enforcement action, pushing its total fines past €432 million.
Coinbase response and background
Coinbase responded in a blog post, noting that it self-reported “many of the items described in the settlement” in January 2024 and addressed most underlying control weaknesses the same year. The company also pointed out that no customer lost funds or access during the incidents in question.
Coinbase detailed five main problem areas, including their handling during the March 2023 US banking crisis, when 30 customers were instructed to deposit dollars into a Coinbase Inc. account at another US bank, resulting in those funds being mixed with other Coinbase assets.
Additionally, following Brexit, some European customers mistakenly continued to deposit funds in accounts based in the UK, while euro withdrawals for US and UK customers from other Coinbase units were sometimes paid out from the Irish safeguarding account.
Technical errors in an internal dashboard left the safeguarding account underfunded by an average of nearly 0.54% of its obligations through 2023 and the first half of 2024. Coinbase failed to report operational changes to the Central Bank at the time.
According to the company, funds were returned daily to the appropriate account through a “Treasury Rebalancing Process,” though this did not initially prevent the mixing of funds.
“These issues largely arose in the context of Coinbase taking steps to protect customers during periods of significant disruption,” a Coinbase spokesperson said.
Coinbase has since redesigned its safeguarding calculations, completed two third-party validations with no open findings, posted a €25 million guaranty bond, and hired a dedicated head of safeguarding.
Mini dictionary: Coinbase Ireland Limited, the Irish arm of leading cryptocurrency exchange Coinbase, operates under e-money regulations to manage customers’ fiat balances in Europe. The Central Bank of Ireland is Ireland’s primary financial regulator overseeing banks, insurers, and financial services providers.
Ongoing regulatory pressure
This recent penalty comes less than a year after the Central Bank imposed a €21.5 million fine on Coinbase Europe for failing to monitor over 30 million transactions for potential money laundering or terrorist financing risks.
Coinbase Europe’s Irish registration expired at the end of 2025, following the company’s decision to relocate its European headquarters to Luxembourg under a MiCA license granted by the Luxembourg financial regulator.
Coinbase is recognized as the largest US-based cryptocurrency exchange and serves as the primary custodian for most US spot bitcoin ETFs, securing a significant share of bitcoin on behalf of institutional investors.
