Coinbase Expands To Bermuda, Eyes Abu Dhabi And Derivatives

San Francisco-based crypto exchange Coinbase has been granted a license to operate in the offshore financial haven of Bermuda as it seeks to diversify its business outside the US.

The Class F license, issued by the Bermuda Monetary Authority, will enable Coinbase to conduct activities that fall under the region’s Business Act which includes issuing, selling or redeeming digital assets, among other digital-asset related services.

“Bermuda was one of the first financial centers to pass comprehensive digital assets regulation in 2018, and its regulatory environment is long known for a high level of rigor, transparency, compliance, and cooperation,” the exchange said in a blog post on Wednesday.

Coinbase is also seeking to establish an offshore derivatives exchange in the British Overseas Territory, according to Fortune Crypto.  It will reportedly offer perpetual swaps — a type of futures contract — and other crypto derivatives, previously inaccessible in the US due to tight regulatory restrictions.

In an attempt to seek out alternative revenue streams outside of the US, Coinbase’s move can be viewed as an attempt to challenge existing rivals such as Binance — the world’s largest exchange by spot trade volume.

Binance also tops the list for the derivatives market, far outstripping other exchanges including Bybit, OKX, Bitget, CME and Huobi, Coinglass data shows. CEO Brian Armstrong flagged intentions last year to seek sources that did not rely solely on trading activity, particularly when the markets soured, as seen in recent times.

The exchange faces far greater pressures on home soil, particularly after an entanglement with the securities regulator that has recently sent Coinbase a Wells notice, a precursor to suing the firm.

Speculation is now mounting as to whether the publicly-listed exchange intends to leave the US following a series of high-profile actions taken against crypto firms by the SEC.

“Anything is on the table, including relocating,” Brian Armstrong is quoted as saying during the Innovate Finance Global Summit Tuesday.

In addition to its expansion in Bermuda, Coinbase also announced plans to push out operations in Abu Dhabi as part of a “Go Broad & Go Deep” plan designed to diversify its offerings. It is also moving forward with development in Brazil and Canada.

“Coinbase chose to become a public company in the US because we believe the US would best be served by embracing this fundamental innovation, but we’re also focused on international markets, many of which are moving forward with strategies to become ‘crypto hubs,’” the exchange said in its blog. 

“We would like to see the US take a similar approach, but a regulation-by-enforcement approach in the US is instead leading to a disappointing trend for crypto development in the US.”

A Coinbase representative declined to comment further.

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