Key takeaways:
- Coinbase is forging forward with a worldwide derivatives platform as the cryptocurrency industry faces legal obstacles in the United States.
- The new global cryptocurrency platform was established with Bermudan regulators’ assistance.
Public bitcoin exchange Coinbase is forging forward with a worldwide derivatives platform as the cryptocurrency industry faces legal obstacles in the United States.
A new institutional platform for trading cryptocurrency derivatives, the Coinbase International Exchange (CIE), was unveiled by Coinbase on May 2. Later this week, the CIE will begin trading by introducing perpetual futures for Bitcoin and Ether. Without the need for currency on-ramps, all trade on the CIE will be settled in USD Coin, a stablecoin backed by Coinbase.
Coinbase emphasized that institutional clients in qualified non-U.S. jurisdictions can access direct access trading on CIE using an application programming interface. Coinbase said:
“At this time, these items are not offered to retail customers”
The new global cryptocurrency platform, according to the release, was established with Bermudan regulators’ assistance. The Bermuda Monetary Authority (BMA) granted Coinbase a license by the middle of April 2023, as previously announced. With the help of the Class F license, Coinbase was able to conduct token sales and issuances, operate a digital asset exchange, and a supplier of digital asset derivatives exchange services.
According to Coinbase, the regulatory climate in Bermuda is renowned for its high level of transparency, compliance, and cooperation.
Bermuda is a self-governing, parliamentary-run British overseas colony. Similar to the United Kingdom, where cryptocurrencies are currently legal, Bermuda has been supportive of cryptocurrencies and has recently become more optimistic about the sector.
Miami International Holdings, which runs the Bermuda Stock Exchange, acquired the remaining assets of the defunct FTX cryptocurrency exchange in late April. LedgerX, a clearinghouse and futures and options exchange owned by FTX, was purchased by the business for $50 million.
Despite industry failures like FTX, Bermuda’s Premier and Finance Minister Edward Burt previously stated that the government is still open to cryptocurrency. Local officials also declared last year that Bermuda would maintain its goals of becoming a global center for cryptocurrency, despite the sector experiencing a severe bear market in 2022.
The news comes as major American investment firm Citigroup downgrades Coinbase shares from buy to neutral or high risk and lowers its price objective from $80 to $65 per share. According to Citigroup analyst Peter Christiansen, a future concern for Coinbase is the regulatory unpredictability in the larger Bitcoin industry.
Coinbase shares have been down for several weeks since Citi made his comments. The price of Coinbase shares has fallen more than 20% in the previous month, from a high of about $72 in April to $50 on May 1st.
Coinbase previously intended to launch a worldwide cryptocurrency exchange by the middle of March 2022. Just a few days before the exchange made its official announcement that it had received a Wells notice from the United States Securities and Exchange Commission, the first reports on Coinbase’s upcoming global cryptocurrency platform surfaced. Coinbase responded by filing a motion against the SEC on April 25, requesting that the watchdog clarify sector rules.
A Coinbase user filed a complaint against the exchange yesterday, claiming that the exchange’s requirement that users upload pictures of their IDs and a self-portrait in order for the business to perform KYC checks violated particular provisions of the Illinois BIPA.
