The Central Bank of Ireland announced on Thursday (22) a €3.25 million fine against Coinbase Ireland Limited for breaching rules on safeguarding client funds and outsourcing essential activities. The violations occurred between November 2020 and August 2025, according to the regulator.
The penalty involves Coinbase Ireland's role as an electronic money institution, responsible for issuing and redeeming balances denominated in traditional currencies. These funds can be used by clients to trade cryptocurrencies on the Coinbase group platform. The case, therefore, does not directly concern the custody of digital assets.
One of the problems identified was insufficient funds in the account intended to safeguard client money. According to the settlement document, errors in calculation and reconciliation systems resulted in daily deficits for at least 18 months.
The largest daily shortfall recorded reached €3.4 million in 2023 and €5.2 million in 2024. The regulator also identified failures in the segregation of funds, including the mixing of client funds from the Irish entity with amounts belonging to clients of other companies in the group.
These irregularities increased the risks to the protection of balances, particularly in a possible insolvency scenario. The deficits identified do not, by themselves, mean that clients suffered permanent financial losses.
Regulator identified excessive reliance on operations in the United States
The investigation concluded that Coinbase Ireland transferred essential fund protection functions to group companies in the United States without maintaining sufficient local structures to supervise those activities.
For more than four years, the Irish subsidiary lacked the technical expertise, control mechanisms and governance deemed adequate to monitor the outsourced operations.
The Central Bank had already communicated concerns to the company in 2022 and 2023. An inspection initiated in May 2024 confirmed persistent deficiencies. Subsequently, Coinbase adopted corrective measures, including appointing a person responsible for safeguarding funds. A remediation program underwent external verification and was closed in June 2026.
The document also reveals differences between the procedures actually used and those presented during the regulatory authorization process. Among them were the movement of funds through bank accounts of other group companies and the use of manual processes in activities initially intended to be automated.
Karen O'Leary, Director of Enforcement at the Central Bank of Ireland, said that payment and electronic money institutions have a fundamental obligation to fully protect client funds.
“We do not tolerate deficiencies in fund protection mechanisms”, said the authority.
The penalty originally set was €4,646,597, but it was reduced by 30% after the agreement signed on October 21. Coinbase Ireland acknowledged the violations and accepted the sanctions, which include a formal reprimand.
The fine still requires confirmation by the High Court of Ireland and will only take effect after this judicial stage.
