Coinbase to Offer Crypto-Linked Derivatives in the EU
Coinbase has announced its plans to offer crypto-linked derivatives in the European Union (EU) and is in the process of acquiring a company with a MiFID II license to do so. The EU updated its rules governing financial instruments with MiFID II in 2017 to include asset classes such as fixed income, derivatives, and currencies. Coinbase aims to serve professional and institutional customers by expanding its offerings to include derivatives trading. If the acquisition is completed, it will mark Coinbase’s first launch of derivatives trading in the EU. With a MiFID II license, Coinbase will be able to offer regulated derivatives like futures and options in the EU.
Rigorous Compliance Standards and Global Expansion
Coinbase is committed to adhering to rigorous compliance standards in the EU, including anti-money laundering measures, customer transparency, and sanctions requirements. The company aims to achieve its five-point global compliance standard and has a team of over 400 professionals with experience at agencies like the FBI and Department of Justice. Coinbase sees derivatives as a key battleground, as they make up 75% of overall crypto trading volumes. However, it still has a long way to go compared to larger rivals like Binance. Coinbase currently offers trading in bitcoin and ether futures in the US and other markets outside the US.
A Key Battleground for Coinbase
Derivatives are crucial for Coinbase’s growth strategy, but it faces tough competition from Binance and other firms in the market for crypto-linked derivatives. Although Coinbase does not offer crypto derivatives products in the UK due to regulatory restrictions, it plans to expand internationally. The company made its first move into derivatives with an international exchange in Bermuda and launched crypto derivatives in the US after receiving regulatory approval. While Coinbase considered acquiring FTX Europe, it ultimately decided against it. Coinbase has been actively expanding in international markets as it faces regulatory challenges in the US, including a lawsuit from the SEC.
Expanding Beyond the US
Coinbase’s expansion drive extends beyond the US as it seeks regulatory bases and licenses in different countries. The company chose Ireland as its primary regulatory base in the EU and applied for a single MiCA license. It also obtained a virtual asset service provider license from France, allowing it to offer custody and trading in crypto assets in the country. Coinbase is dedicated to global expansion and aims to bring a more open financial system to people worldwide.
Hot Take: Coinbase Seeks to Dominate Derivatives Market in the EU
Coinbase’s move to offer crypto-linked derivatives in the EU is a significant step towards its goal of serving professional and institutional customers. By acquiring a company with a MiFID II license, Coinbase can expand its offerings to include regulated derivatives like futures and options. This move positions Coinbase as a key player in the derivatives market, which makes up a substantial portion of overall crypto trading volumes. As Coinbase continues its international expansion, it faces fierce competition from rivals like Binance. However, with its commitment to rigorous compliance standards and global growth strategy, Coinbase aims to become a dominant force in the EU derivatives market.
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