2 - 4 minute read
Amidst regulatory challenges in the United States, Coinbase has announced the launch of a global derivatives platform, the Coinbase International Exchange (CIE), designed for crypto derivatives trading. The platform will initially list Bitcoin and Ether perpetual futures, with all trading settled in Coinbase-backed stablecoin USD Coin. However, direct access trading on CIE is only available to institutional clients in eligible, non-U.S. jurisdictions.
The CIE has received regulatory support from Bermuda, where Coinbase obtained a Class F License by mid-April 2023, allowing it to operate a digital asset exchange and a digital asset derivatives exchange provider as well as operate activities like token sales and issuance. Bermuda is known for its high level of transparency, compliance, and cooperation, making it an ideal location for Coinbase’s crypto exchange.
Coinbase’s move towards a global derivatives platform comes at a time when cryptocurrencies are facing regulatory unpredictability in the broader cryptocurrency sector. Major American investment bank Citi recently downgraded Coinbase shares to neutral or high risk from buy or high risk with a $65 price target, down from $80. According to Citigroup analyst Peter Christiansen, regulatory unpredictability in the broader cryptocurrency sector is a looming threat to Coinbase.
Despite the regulatory challenges, the move towards a global derivatives platform presents an opportunity for institutional clients to diversify their crypto investments through perpetual futures. The CIE’s settlement in Coinbase-backed stablecoin USD Coin also presents a stable trading option compared to fiat on-ramps. However, retail clients in the United States will not have direct access trading on CIE.
The Bottom Line
The launch of the Coinbase International Exchange presents an opportunity for institutional clients to diversify their crypto investments through perpetual futures. However, retail clients in the United States will not have direct access trading on CIE. Regulatory unpredictability in the broader cryptocurrency sector remains a looming threat to Coinbase, with major American investment bank Citi recently downgrading its shares. Nevertheless, the regulatory support from Bermuda presents a bullish outlook for the crypto industry, with the government remaining open to crypto despite industry failures.
