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Coinbase International: US Leverage Trading Is So Close…Yet So Far Away
Coinbase & Brian Armstrong are driven globally by US regulation, trading Uncle Sam for Crypto Sam. Their passport? Crypto.
Coinbase International: A Global Crypto Market Player
Coinbase International is making a name for itself as a trusted and secure entity in the global crypto market. It's noteworthy for its robust regulatory and risk management frameworks, which are centered on customer protection. Coinbase International Exchange enables institutional clients to trade in BTC and ETH perpetual futures contracts, providing versatile trading strategies. The access to perpetual futures also allows more flexibility, letting traders express their market views with less friction and leverage.
Eligibility and Available Assets: Coinbase International Exchange is available only to non-US-based institutions in permissible jurisdictions. Currently, perpetual futures for BTC and ETH, settled in USDC, are on offer.
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Coinbase’s International Plan
Coinbase is pushing to expand globally, aiming to increase economic freedom through cryptocurrency. They are setting up regulated operations in various international locations to grow and ensure customer protection. In Singapore, they've launched a seamless crypto experience for retail customers and have a new partnership with Standard Chartered bank. They've also expanded in Brazil, integrating easy account top-ups and localized support. In Canada, they're investing in local innovation and working with policymakers on a crypto regulatory framework. They're in talks with Abu Dhabi's Financial Services Regulatory Authority for a potential exchange license. They've secured a license to operate from the Bermuda Monetary Authority. In Europe, they're engaging with leaders and regulators, lauding the European Parliament’s adoption of MiCA, a comprehensive regulatory framework for crypto firms. Coinbase commits to working with governments and regulators worldwide, focusing on customer protection and security, while encouraging the US to become a "crypto hub.”
Significance of the Launch
The launch of Coinbase International Exchange signifies a strategic move towards leveraging trading and building platform liquidity. It could potentially generate higher yields for institutional US investors. This development also demonstrates Coinbase's proactive stance in seeking alternative profit generation methods, despite potential regulatory challenges.
Coinbase's choice of Bermuda is strategic. Bermuda's regulatory framework for cryptocurrencies, the Digital Asset Business Act 2018, provides clear guidelines for crypto businesses. It mandates prudent conduct of business, separate holding of client assets, and maintenance of sufficient digital assets to meet client obligations.
Bermuda's Monetary Authority (BMA) has a significant role in oversight, able to direct actions for non-compliance and impose fines. In addition, the Digital Asset Business Act includes crypto businesses within the ambit of anti-money laundering laws, necessitating stringent compliance measures.
Bermuda is also a low tax jurisdiction with no specific taxes on income, capital gains, or digital assets. This, along with the well-structured crypto laws, makes it a favorable location for crypto businesses. Bermuda crypto law details here.
Despite facing regulatory hurdles at home, Coinbase is charting a new course globally, proving that in the world of crypto, borders are merely a concept. The future is undeniably borderless for this crypto giant.
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Recent History of Coinbase vs Regulators:
Coinbase rejects U.S. regulator's claim it broke rules on crypto - Coinbase had strongly refuted the U.S. Securities and Exchange Commission's (SEC) claim that it violated securities laws, according to a formal response to a legal threat from the regulator. In a public statement, CEO Brian Armstrong and Chief Legal Officer Paul Grewal had stated that, despite the desire to list securities in the future, existing regulatory ambiguity was a challenge. They had emphasized that "Coinbase does not list securities." This had followed Coinbase receiving a Wells notice from the SEC, indicating the regulator's intent to recommend an enforcement action. Despite this, the SEC had neither confirmed nor denied any ongoing investigations. The situation underscored the then growing tensions between the crypto industry and the SEC, with the latter asserting that many digital assets are securities that operate outside its supervision. In a bid for clarity, Coinbase had petitioned a federal court to compel the SEC to establish clear rules for digital assets, while also considering growth outside the U.S. if necessary.
Coinbase Risks Losing Revenue Sources as Regulators Circle - Coinbase, being the largest US cryptocurrency exchange, had faced uncertainty due to regulatory scrutiny of its key business sectors: coin custody, stablecoins, and staking. These services, which Coinbase relied on for growth, had come under increased regulatory watch. The company was expected to report a nearly $600 million loss for the fourth quarter, marking a fourth consecutive quarter of revenue decline. Despite regulatory pressures, Coinbase had maintained that its services differed from other affected companies and should remain unaffected. However, the uncertain regulatory environment had affected Coinbase's market share, and its diversification strategy to reduce reliance on trading fees was under question. CEO Brian Armstrong had expressed willingness to defend Coinbase's staking service in court and had engaged with Washington on regulation discussions. The company had also considered international expansion as a potential growth strategy.
Coinbase Sues SEC To Demand Regulatory Clarity on Crypto - Coinbase had filed a lawsuit against the U.S. Securities and Exchange Commission (SEC), urging the regulator to provide clear regulations for the cryptocurrency industry. The major U.S. cryptocurrency exchange had asked a federal court to press the SEC to respond within seven days to its previous rulemaking petition. The petition, filed in July, requested the SEC to define which digital assets are securities and how securities laws should be applied to digital assets. Coinbase argued that the lack of a clear regulatory framework in the U.S. hampered the market's smooth operation. The SEC had not responded or commented on the request. Despite the SEC's 2019 framework regarding digital assets and securities laws, the overall U.S. crypto sector had found it inadequate. Coinbase's Chief Legal Officer, Paul Grewal, had expressed concerns about the SEC's enforcement actions based on undisclosed interpretations of the law.