Central Bank of Ireland Fines Coinbase Unit €3.25 Million Over Customer Fund Safeguarding Failures

The Central Bank of Ireland imposed the penalty on Thursday, one day after reaching a settlement with the Coinbase subsidiary. The breaches occurred between November 2020 and August 2025 under Ireland's Electronic Money Regulations. As an e-money institution, Coinbase Ireland issues euro and dollar balances that European customers use to buy bitcoin and other crypto assets on the Coinbase platform.

The law requires these balances to be held in dedicated safeguarding accounts, completely separate from corporate money and customers of other Coinbase entities. The regulator found three specific failures in Coinbase Ireland's operations.

Three Regulatory Failures

First, Coinbase Ireland placed excessive reliance on its US-based group to design and run its safeguarding controls, lacking the local expertise to oversee that work. Second, its safeguarding account was underfunded for lengthy periods due to poor system design and weak control testing. Third, the firm had no adequate process to flag material changes in its safeguarding practices to the regulator.

The Central Bank set the base penalty at €4.65 million and applied a 30% discount for settling the case. The fine and a reprimand await confirmation from Ireland's High Court. This marks the regulator's 164th enforcement outcome, bringing its lifetime fines past €432 million.

Coinbase's Response

In a blog post, Coinbase stated it self-reported many of the issues described in the settlement in January 2024 and fixed most of the underlying control problems that same year. The company emphasized that no customer lost money or lost access to funds during the period of non-compliance.

The exchange outlined five specific problem areas. During the March 2023 US banking crisis, as Silvergate Bank neared collapse, Coinbase Ireland directed 30 customers to deposit dollars into a Coinbase, Inc. account at another US bank, mixing their funds with those of a separate Coinbase entity. After Brexit, some European customers continued sending deposits to old UK accounts. Additionally, euro withdrawals for US and UK customers of other Coinbase units were sometimes paid out of the Irish safeguarding account for liquidity reasons.

Coding errors in an internal dashboard left the safeguarding account underfunded by an average of roughly 0.54% of its total obligation through 2023 and the first half of 2024. The firm did not inform the Central Bank about changes to its practices, though a daily 'Treasury Rebalancing Process' moved funds back into the correct account each day.

Coinbase has since redesigned its safeguarding calculation, passed two third-party validations with no open findings, posted a €25 million guaranty bond, and hired a dedicated head of safeguarding. The penalty follows a €21.5 million fine the Central Bank imposed on Coinbase Europe in November 2025 for failing to monitor transactions for money laundering risks.