Coinbase Considers Overseas Crypto Trading Platform Amid Regulatory Challenges

by Arthur · March 17, 2023

According to a recent report by Bloomberg, Coinbase has explored the possibility of setting up a cryptocurrency trading platform in a jurisdiction outside the regulatory reach of US agencies. The report suggests that the crypto exchange has discussed this potential move with institutional clients and market makers.

While the exchange only recently discussed establishing a crypto trading platform outside of the US regulatory sphere, the move would allow expanding its offerings to a global customer base beyond its existing marketplace.

With increasing regulatory scrutiny and crypto-friendly banks shutting down operations less than a month apart, the climate for crypto platforms in the US has worsened. In response to this crackdown on the industry, the largest crypto exchange in the US has taken steps to mitigate the impact on its operations.

A solution to the ongoing regulatory crisis for Coinbase?

Crypto companies in the US have faced a challenging regulatory and banking environment, particularly in light of the Securities and Exchange Commission’s (SEC) recent claims that certain crypto services offered within their jurisdiction constitute securities. This has made it difficult for trading platforms to function smoothly.

On the other hand, establishing a crypto trading platform in a jurisdiction outside the US regulatory sphere could offer Coinbase access to new markets. This move could expand Coinbase’s reach and allow them to tap into previously inaccessible markets.

Establishing a new crypto trading platform outside the US could give the exchange the added benefit of diversifying risk in the event of regulatory challenges in the US. In the event of SEC enforcement actions, having a presence abroad can help mitigate the impact on Coinbase’s operations.

In addition, this move could increase the exchange’s liquidity for its institutional clients, giving them more trading options.

What are Coinbase options for a new location?

Although establishing a platform abroad may give Coinbase greater regulatory flexibility, the exchange will still have to navigate the regulatory landscape of the new jurisdiction, which may present its challenges and requirements. So what are the options for establishing a unique place for Coinbase?

Europe appears to be the most promising option for crypto firms in the wake of the recent banking crisis in the US, which has seen the closure of operations of Silvergate, Silicon Valley Bank and Signature Bank, as reported by Bitcoinist.

In addition to Coinbase, several other crypto firms are reportedly exploring opening Swiss bank accounts amid the ongoing banking crisis.

Switzerland’s banking and finance industry has made it a hub for many cryptocurrency startups, and the country is recognized as a leader in the crypto industry. This makes Switzerland a potentially attractive location for Coinbase and other crypto firms looking to establish a foothold in the region.

In recent years, Asian countries such as Japan have emerged as critical players in the cryptocurrency industry. Japan in particular has legalized cryptocurrency as a form of payment and has implemented regulations to protect consumers. The country’s forward-looking approach to cryptocurrency has also made it an attractive destination for many crypto businesses looking to establish themselves in Asia.

Although it is still unclear where Coinbase will ultimately choose to establish its new crypto platform, the possibility of setting up abroad has been floated as a potential solution to the ongoing regulatory challenges facing the industry.

With no indication of a slowdown in the SEC’s and other regulatory agencies’ approach to the crypto industry, other firms may follow in Coinbase’s footsteps.