Coinbase Global Inc. is launching an international derivatives exchange for institutional crypto traders outside the US, seeking to diversity its business amid souring relations with American regulators.
(Bloomberg) — Coinbase Global Inc. is launching an international derivatives exchange for institutional crypto traders outside the US, seeking to diversity its business amid souring relations with American regulators.
The new platform, Coinbase International Exchange, will list Bitcoin and Ether perpetual futures starting this week after it received a license last month from the Bermuda Monetary Authority.
With the move, Coinbase is entering a market dominated by offshore players, such as Binance, the world’s biggest crypto exchange, and previously FTX before its collapse. The company with roots in San Francisco has been facing mounting legal uncertainty after receiving a Wells Notice from the US Securities and Exchange Commission in March, which signals the agency’s plan to sue it over several business lines.
“Coinbase continues to await approval to be able to offer futures directly to our customers in the US,” a company spokesperson told Bloomberg. “The initial international exchange will be in Bermuda and only for non-US institutional clients to start.”
Perpetual futures are popular among crypto traders, who use them to hedge against losses or speculate on the price of underlying tokens using leverage. Unlike contracts in traditional finance, they do not have an expiration date, allowing investors to keep them for as long as they like. At Coinbase International Exchange, the contracts will initially offer up to five times leverage, and all trading will be settled in USD Coin, the stablecoin issued by Circle Internet Financial Ltd., which has a partnership with Coinbase.
In a blog post, Coinbase said it is still “committed to the US” but called the the country’s “regulation by enforcement” approach a “disappointing trend.” Coinbase derived 84% of its revenue last year from the US, where it has the most name recognition. Some of its earlier attempts at expanding globally have been met with challenges: Coinbase shut down its operations in Japan earlier this year, citing market conditions.
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