This is a rare enough exercise to be highlighted. Every year since 2019, Coinbase has published its "transparency report" in which the US exchange platform goes into detail about all its activities in relation to States. When we say "States", we mean national agencies and and governments around the world.
Note that the other major US exchange platform, Kraken , engages in a similar exercise recently.
The publication of Coinbase's report is all the more interesting this year (the document is here ) as platforms have been under pressure for the past year and the fall of FTX. A fortnight ago, the world leader in the sector, Binance, agreed to pay a fine of more than $4 billion in the United States in an investigation into "money laundering". The company's boss, Changpeng Zhao, has also had to step down from his post.
As you will have gathered, the platforms are therefore being waited for, and Coinbase's publication, which constantly advocates the normalisation of crypto players' relations with the authorities, comes at just the right time.
But what does the report, which covers the period from October 2022 to September 2023, say? 😏
Here's what we took away from it:
👉 The privacy/regulation equation
First, Coinbase explains its approach, setting out the conditions under which it "collaborates" with the authorities. "We have an obligation to respond to these requests if they are valid under financial regulations and other applicable laws," explains Paul Grewal, who is the platform's legal director (find his interview here ).
Privacy is one of the great promises carried by the development of the crypto ecosystem. But how do you reconcile privacy and regulation? This is the difficult equation that the sector has to answer more and more every day to continue its democratisation.
Exchange platforms like Coinbase, launched in 2012, are still today the main gateway for individual and professional investors to the crypto ecosystem. They are therefore key interlocutors for the authorities since a large proportion of flows transit via elles🕵️.
👉 Requests from the authorities on the rise
According to the report, Coinbase recorded 13.079 requests from the authorities, up 6% on the previous year (12,320), which is still a relatively small increase.
In reality, it is compared to 2021 (5562 requests), that the 2023 level is impressive. This sharp rise in two years can be explained in particular by the authorities' growing interest in the subject after the Bull Market of 2020-2021, which brought in many new users.
Not surprisingly, the majority of requests come from the United States (5686 requests). This can be explained by the fact that 80% of Coinbase's business is in the United States; as one of the company's managers, Nana Murugesan, explained to us (read his interview ), the rest of the business is mainly in Europe.
Behind the United States, we thus find Germany, the United Kingdom and Spain. France completes this European trio.
Coinbase also states that 19 countries have applied for the first time in 2023. These include Armenia, Cameroon, Costa Rica, Colombia, etc. The rest of the list is available on the Coinbase website .
Interestingly, the strongest growth in applications has been in Ukraine (+300%), Australia (+262%) and Portugal (+211%). The reasons for these increases are obviously varied; on the Ukraine, the rise is primarily explained by the greater use of cryptos in the context of the war with Russia, while in Portugal, the rise is primarily due to the increase in activity in a country where the tax framework is particularly advantageous.
Overall, these figures show that there is an adoption of crypto and that the sector is continuing its institutionalisation with an increasingly important dialogue between the authorities and crypto players.
👉 Criminal-related requests dominate
As in previous years, requests from law enforcement agencies dominated.
Coinbase states that these requests globally made up more than 95% while those described as "civil or administrative" were just over 4%. In the US, more than 90% of the requests were related to federal and local felony cases.
