Coinbase, one of the world’s largest cryptocurrency exchanges, has launched an international exchange that allows institutional traders outside the US to trade Bitcoin (BTC) and Ethereum (ETH) perpetual futures. The new platform will be settled in USD Coin (USDC) with no fiat on-ramps required. The company’s perpetual futures contracts offer up to five times leverage. The launch of this international exchange was made possible due to Coinbase’s recent regulatory approval from Bermuda Monetary Authority (BMA). Coinbase International Exchange (CIE) website has specified that the exchange is only available “to non-US institutions in select jurisdictions.” However, it plans to expand its platform later this year to serve “non-US professional investors and advanced retail users in eligible countries”.
Despite the launch of this international exchange, Coinbase has faced increased regulatory scrutiny recently. In March, the US Securities and Exchange Commission (SEC) issued a Well Notice to Coinbase over some of its products. Subsequently, the exchange has been involved in a war of words with the financial regulator, arguing that it does not list securities, and also filed a legal action against the Commission. The company’s CEO, Brian Armstrong, hinted that the firm might consider leaving the US if the regulatory landscape does not improve. Meanwhile, the exchange’s shares have seen a decline of over 20% over the past month, dropping from as high as $72 in April to $50.1 as of May 1, according to Tradingview data. Furthermore, leading financial institution Citi downgraded shares of the exchange to neutral, citing the current regulatory headwind the exchange is facing. During this period, CEO Armstrong offloaded over $2 million of the exchange’s stock.
In conclusion, the launch of the international exchange by Coinbase is a significant move in expanding its services beyond the US market. The platform offers institutional traders an opportunity to trade Bitcoin and Ethereum perpetual futures without the need for fiat on-ramps. However, the company’s ongoing legal battle with the SEC and the regulatory headwind it faces pose significant challenges to its growth.