Coinbase Launches Perpetual Derivates Exchange in Bermuda
Coinbase launched an offshore derivatives exchange today in Bermuda, the company announced in a press release. The new exchange aims to attract institutional investors by offering them an option to trade perpetual bitcoin and ether futures.
Coinbase to Offer Trading of Perpetual Futures on the New Exchange
Coinbase Global announced on Tuesday the launch of its crypto derivatives exchange in Bermuda after securing a regulatory license to offer services in the self-governing British overseas territory. The exchange, Coinbase International Exchange, will initially allow institutional investors “based in eligible jurisdictions outside of the US, to trade perpetual futures,” the company said in the press release.
“Perpetual futures accounted for nearly 75% of global crypto trading volume in 2022, creating highly-liquid markets and offering traders additional versatility in their trading strategies.”– Coinbase said in the announcement on Tuesday.
Perpetual futures refer to a type of crypto derivative contract that enables investors to bet on the future price of cryptocurrencies. They are called perpetual because they have no expiry date and can be held indefinitely. In addition, perpetual futures utilize a funding mechanism to ensure that the contract price tracks the underlying asset’s price.
The crypto exchange will initially offer bitcoin and ether perpetual futures, and all transactions will be settled in USD Coin (USDC). Coinbase’s former group product manager, Emmanuel Goh, will lead the newly launched derivatives exchange.
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The Persisting Dispute Between Coinbase and the SEC
The launch of the Coinbase International Exchange aligns with the company’s previously announced plans to look for offshore growth amid mounting regulatory pressures in the US. Recent months were marked by a crackdown by the Securities and Exchange Commission (SEC) and other regulators on the crypto industry, as well as the worst banking crisis since 2008.
This did not bode well for crypto exchanges, particularly Coinbase, which also has a personal dispute with the SEC. In March, the security regulator delivered a Wells notice to Coinbase, indicating a possible enforcement action against the crypto exchange due to alleged securities laws violations.
Coinbase denied the SEC’s accusations, with the company’s CEO Brian Armstrong recently saying that Coinbase will ultimately have to take legal action against the SEC. Coinbase ultimately filed a lawsuit against the SEC last month to force the SEC to respond to a months-old petition on whether it would allow the crypto industry to be regulated through existing SEC frameworks.
Do you think Coinbase made the right choice to launch an offshore exchange considering the current regulatory pressures in the US? Let us know in the comments below.