Coinbase’s international exchange launches despite US SEC’s crypto crackdown

Bitcoin and Ether perpetual futures will be listed for trading on the Coinbase International Exchange.

Despite regulatory challenges faced by the cryptocurrency industry in the US, Coinbase, a public crypto exchange, is pressing ahead with its global derivatives platform.

Coinbase has recently revealed the launch of the Coinbase International Exchange (CIE), a new platform aimed at institutional clients, which is tailored for the trading of crypto derivatives.

This week, the CIE will begin trading Bitcoin and Ether perpetual futures, with all transactions conducted using USD Coin, a stablecoin backed by Coinbase, and with no need for fiat on-ramps.

Coinbase emphasized that CIE’s direct access trading via application programming interface is only available to institutional clients in eligible, non-US jurisdictions, with the caveat that these products are currently not accessible to retail customers.

Coinbase chose not to provide information regarding the specific jurisdictions where CIE will be accessible, in response to a request for comment.

Gemini, a significant crypto exchange, launched a non-U.S. derivatives platform on May 1. It is available to clients in almost 30 regions globally, such as Singapore, Hong Kong, Bermuda, El Salvador, Philippines, Thailand, among others. Gemini stated that it is not accessible to customers in the United States of America, United Kingdom, or the European Union.

As per the announcement, the global cryptocurrency platform has been launched with the approval of Bermuda’s regulators. Coinbase received a license from the Bermuda Monetary Authority in mid-April 2023, which authorized the company to operate a digital asset exchange, a digital asset derivatives exchange provider, as well as activities such as token sales and issuance. This license is known as a Class F License.

Coinbase highlighted that Bermuda is recognized for its regulatory landscape, which prioritizes openness, adherence to regulations, and collaboration.

Bermuda is an overseas territory of the United Kingdom with a parliamentary government. Like the UK, where cryptocurrencies are legal, Bermuda has been supportive of the crypto industry and has become more optimistic about it in recent times.

In April, Miami International Holdings, which operates the Bermuda Stock Exchange, acquired parts of the failed FTX crypto exchange. The company purchased FTX’s futures and options exchange, as well as clearinghouse LedgerX, for a total of $50 million.

The Bermudan government has shown a positive attitude towards the crypto industry, despite some industry setbacks, such as the collapse of FTX. In fact, Bermudan Premier and Finance Minister Edward Burt has stated that the government is still welcoming towards crypto. Even during the 2022 bear market, local authorities reaffirmed their commitment to keeping Bermuda as a hub for cryptocurrencies.

The recent announcement about Coinbase launching its new international derivatives platform came at a time when Citigroup, a major investment bank in the U.S., downgraded its shares to neutral or high risk from buy or high risk. The downgrade also included a reduction in price target from $80 to $65. Citigroup analyst Peter Christiansen believes that regulatory uncertainty in the crypto sector poses a significant risk to Coinbase.

Coinbase’s stocks have been declining for the past few weeks, and it lost more than 20% of its value in the last month, dropping from its peak of approximately $72 in April to $50 on May 1. This happened while major U.S. investment bank Citigroup downgraded Coinbase shares from “buy or high risk” to “neutral or high risk” and reduced its price target to $65 from $80, warning that regulatory uncertainty in the wider crypto sector is a potential threat to Coinbase.

Coinbase had planned to create a worldwide cryptocurrency exchange by mid-March 2022. Reports about the exchange’s international crypto platform emerged just days before it revealed receiving a Wells notice from the US Securities and Exchange Commission (SEC). In response, Coinbase filed a motion against the SEC on April 25, asking for clarity on industry regulations.