Coinbase has launched a global cryptocurrency derivatives exchange days after disclosing that it was going offshore with a Bermuda license. The US-based digital asset exchange said the new platform is only open to only eligible, non-US institutional traders.
Coinbase and Gemini Launch New Platforms
The new platform on Tuesday listed Bitcoin (BTC) and Ether (ETH) perpetual futures contracts, Coinbase said in a blog post, adding that the platform currently only offers 5x leverage, with all trades settled in stablecoin USD Coin (USD).
It’s official! Coinbase International Exchange is here. Institutional traders in eligible non-US jurisdictions now have access to trade perpetual futures settled in USDC with up to 5x leverage.
— Coinbase International Exchange 🛡️ (@CoinbaseIntExch) May 2, 2023
Read more about our announcement ⬇️https://t.co/vrIfK999ompic.twitter.com/E5ssl8NBz3
“As more and more markets are moving forward with regulatory frameworks to become crypto hubs, we believe the moment is right to launch this international exchange,” Coinbase said.
Earlier on Monday, Gemini’s non-US derivatives trading platform, Gemini Foundation, went live days after its launch, opening with BTC perpetual contracts denominated in stablecoin Gemini dollar (GUSD). The Winklevoss twins-owned platform is open to traders from all jurisdictions except those in the United States, United Kingdom and the European Union, the American firm said in a statement.
1/ We’re thrilled to announce that Gemini Foundation’s derivatives platform is now live with our BTC/GUSD perpetual contract trading across 30 countries. https://t.co/NyQLKhsZYt
— Gemini (@Gemini) May 2, 2023
US Regulators Go after Crypto Firms
Both moves come as US regulators crack down on digital asset firms in the country, categorizing their cryptocurrency assets as securities. Late last month, Coinbase filed a lawsuit against the Securities and Exchange Commission (SEC), demanding that the US securities watchdog provide guidance for the cryptocurrency industry using its formal rulemaking process.
The lawsuit came a month after Coinbase got a Wells notice from the SEC, stating that it has been violating the US securities law by offering unregistered securities. The securities watchdog in April also charged Bittrex and its Founder for allegedly operating as a national securities exchange, broker and clearing agency without registration.
In late March, derivatives markets watchdog, the Commodity Futures Trading Commission, sued Binance and its CEO for allegedly operating an illegal crypto derivatives exchange in the country, among other allegations.
On top of that, in recent months, the SEC filed charges against crypto executives, such as TRON Founder Justin Sun and Terraform Labs CEO Do Kwon, as well as platforms, such as Kraken, Gemini and Genesis, criticizing them for offering cryptocurrencies as unregistered securities.
SEC Maintains Stance on Crypto as Securities
Yet, the SEC does not appear ready to back down on its stance that digital assets fall under the US securities law. Gary Gensler, the Chairman of SEC, recently released a video reiterating this point. However, some executives have accused the regulators of failing to cooperate with them.
Intermediaries for investment contracts are required to comply with securities laws & register with @SECGov.
— Gary Gensler (@GaryGensler) April 27, 2023
Instead, many crypto platforms are contending that their investment contracts are something else.
The law cares about what something actually is, not what you call it.
“Rest assured that Coinbase is committed to the US, but countries around the world are increasingly moving forward with responsible crypto-forward regulatory frameworks to strategically position themselves as crypto hubs,” Coinbase said. “We would like to see the US take a similar approach instead of regulation by enforcement which has led to a disappointing trend for crypto development in the US.”
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