Coinbase Debuts Offshore Exchange With Bitcoin And Ethereum Perpetual Futures Amid Regulatory Challenges In The US

Coinbase today announced the launch of a global derivatives platform as the U.S.-based cryptocurrency exchange faces harsh regulatory crackdown at home. 

The new facility, Coinbase International Exchange (CIE), follows regulatory approval from the Bermuda Monetary Authority (BMA) and will start trading by listing bitcoin and ether perpetual futures.

Coinbase Rolls Out Offshore Perps Exchange With 5X Leverage

Coinbase has set up shop in Bermuda as it battles regulators in the U.S., its home market.

The firm said Tuesday that it would allow international clients to trade perpetual futures out of Bermuda via an application programming interface (API) in eligible, non-U.S. jurisdiction. Dubbed Coinbase International Exchange, the new venture will not be open to U.S. users.

The platform will first let traders bet on the price of Bitcoin and Ether through so-called perpetual futures with leverage capped at 5%. All trading on the new platform will be settled in the USDC stablecoin.

The move marks Coinbase’s latest foray into crypto perps trading, one of the most popular sectors accounting for nearly 75% of global crypto trading volume in 2022, according to a blog post by the firm.

Unlike traditional futures, where buyers and sellers are forced to enforce the deal on a specified date despite the prevailing market conditions, perpetual futures don’t have an expiration period, meaning that traders can hold their positions infinitely.

Regulatory Shakeup In The U.S.

There have been recent headwinds in the regulatory regime in the U.S. Coinbase has been publicly feuding with the U.S. Securities and Exchange Commission since the watchdog agency charged former Coinbase product manager Ishan Wahi and his brother Nikhil with insider trading in July 2022 — and sent the exchange a Wells Notice in March.

The publicly-traded company emphasized that it is still committed to the United States, but noted that countries across the globe are increasingly moving forward with responsible, crypto-forward regulatory rulebooks as they endeavor to fortify their positions as themselves as hubs for crypto.

“We would like to see the U.S. take a similar approach instead of regulation by enforcement, which has led to a disappointing trend for crypto development in the U.S.,” Coinbase stated. “The Coinbase International Exchange is an expansion, bringing the safest, most trusted name in crypto to the global market.”

The ongoing regulatory crackdown in America has forced other exchanges to expand overseas. Bittrex recently shuttered its stateside operations shortly before being sued by the SEC. And today, rival Gemini also announced that it would offer derivatives trading to customers in 30 countries and territories.