Coinbase Gets Regulatory Green Light For Offshore Exchange, Launch Imminent

Just a day after disclosing its possible relocation, Coinbase, the largest crypto exchange in the United States, announced its latest achievement of acquiring a Class F license from the Bermuda Monetary Authority (BME) under the Digital Asset Business Act.

This raised speculation among the crypto community on how the crypto exchange is planning to cope with the current crypto regulatory scrutiny in the US aside from relocating in the region.

Offshore Exchange To Be Launched Sooner Than Expected

Following the obtained license, Coinbase is said to be launching an offshore derivatives exchange platform as soon as next week. The offshore exchange will allow for the trading of perpetual swaps tied to cryptocurrencies.

According to the report, the Class F license granted to Coinbase enables the company to engage in various activities, including the sales and issuance of tokens. Additionally, it grants permission for Coinbase to function as a digital asset exchange, as well as a provider of digital asset derivatives.

The exchange noted it selected Bermuda as one of its international hubs due to the extensive experience of its financial regulations.

Coinbase added: 

Bermuda was one of the first financial centers to pass comprehensive digital assets regulation in 2018, and its regulatory environment is long known for a high level of rigor, transparency, compliance, and cooperation.

Notably, this news was disclosed alongside the company’s update on its “global scale to go broad and go deep.” According to Coinbase, it will establish regulated entities and local operations” to enable expansion on a global scale. Additionally, so far, it has had progress in companies such as Brazil, Canada, Singapore, Europe, and the United Arab Emirates.

The US-based crypto exchange noted: 

Our approach globally will be consistent with our approach in the United States: we will work with governments and regulators in different markets, and will always aim to be the most trusted and compliant crypto company in any market.

Coinbase Discloses Planned Relocation From The US

On Tuesday, Brian Armstrong, the CEO of Coinbase, called for clearer regulations on cryptocurrency in both the US and the United Kingdom. In doing so, Armstrong argues that without such laws, companies may be forced to develop in “offshore havens,” where they may be subject to less oversight and regulation.

This was disclosed during an industry conference organized by Innovate Finance.

Armstrong cited the failure of the Bahamas-based FTX exchange last year as evidence of the need for clearer regulations. 

The CEO believes that offshore locations with less regulatory oversight pose a risk to the legitimacy of the cryptocurrency industry.

With cryptocurrency gaining popularity around the world, governments are struggling to keep up with regulations. The lack of clear regulatory frameworks has resulted in different countries approaching the regulation of cryptocurrency differently, which has resulted in many companies operating in regulatory grey areas. This makes it difficult for companies like Coinbase to operate effectively while also complying with the law.

Armstrong has urged the US and the UK to set an example for other countries and create clear guidelines for the regulation of cryptocurrency. If both countries can develop effective regulatory frameworks for the industry, this could lead to increased legitimacy and growth for cryptocurrency.

Regardless, as the popularity of cryptocurrencies continues to rise, it is imperative for governments to implement clear and transparent regulations to protect investors and promote legitimate growth in the industry. 

Meanwhile, the crypto industry seems to have been a bit exposed to recent news. Over the past 24 hours, the global crypto market capitalization has declined by 5% with the total value slipping below $1.2 trillion.

Featured image from Shutterstock, Chart from TradingView