Leading American crypto exchange Coinbase has launched a derivatives arm for its exchange outside of the United States. The platform will be offering Bitcoin and Ethereum “perpetual futures” to non-US users, since this form of trading is prohibited in the US.
The exchange will have its headquarters in Bermuda, where it has received regulatory approval from the Bermuda Monetary Authority to conduct its operations within the country and beyond.
Coinbase says that perpetual derivatives trading is a huge trading type accounting for 75 percent of global crypto trading volume last year, which means exchanges not engaging in it are missing out. commenting on the launch of the platform, Coinbase said:
“Building out a global perpetual futures exchange for digital assets will help support an updating of the financial system by making Coinbase’s trusted products and services more accessible to users of digital assets who live outside of the US”
“As more and more markets are moving forward with regulatory frameworks to become crypto hubs, we believe the moment is right to launch this international exchange,” the company added.
Coinbase Calls for Better Regulation
Coinbase’s decision to launch a derivatives trading platform outside of the U.S was necessitated by the need to maximize the use of the platform while staying out of trouble with regulators in the country. Since perpetual derivatives trading is prohibited in the U.S, it was impossible to launch the platform in the country.
The exchange recently filed a lawsuit against the securities and exchange commission SEC, demanding that the commission creates clear regulations for crypto. Its CEO Brian Armstrong also said that the exchange was open to the idea of moving outside the U.S.
However in a statement about the international platform launch, Coinbase said it remains committed to the US. It however expressed concern that other countries are positioning themselves as crypto hubs by bringing friendly regulations while the U.S is left behind.
“We would like to see the US take a similar approach instead of regulation by enforcement which has led to a disappointing trend for crypto development in the US,” Coinbase said.
The EU recently adopted a regulatory framework for all member countries that will allow the crypto industry to thrive. This was after countries like Russia already started exploring ways to harness the use of crypto for international transactions as a way to bypass the sanctions by the EU and the U.S.
Indeed, the UK is working hand in hand with crypto companies to build a mutually beneficial regulatory framework for crypto. The cause chaired by the Financial Conduct Authority is one of many efforts to make the UK a friendly environment for crypto startups to thrive.
Coinbase Follows Gemini Footsteps
Coinbase is not the first U.S crypto exchange to launch a crypto derivatives trading platform outside of the U.S, Gemini is. The exchange announced last month that it was launching an offshore perpetual derivatives trading platform, although it did not mention a location at the time.
Like Coinbase’s offshore platform, Gemini’s platform known as Gemini Foundation is expected to cater to non-U.S users only, and will be available in most countries around the world.
Both exchanges took the step because of the regulatory pressure in the U.S and more may be doing the same in the near future if a clear regulatory framework isn’t agreed upon soon.