Coinbase gets Bermuda license, plans to launch offshore exchange in coming weeks

Coinbase gets Bermuda license, plans to launch offshore exchange in coming weeks

Coinbase CEO Brian Armstrong speaks at the IFGS 2023 Summit at the Guildhall in London on April 18, 2023.

Coinbase CEO Brian Armstrong speaks at the IFGS 2023 Summit at the Guildhall in London on April 18, 2023. Carlos Jasso—Bloomberg/Getty Images

Coinbase has been granted a license to operate in the offshore port of Bermuda, signaling that the company is doubling down on plans to grow its international operations at a time when US regulators have become hostile to the crypto industry.

The company revealed in a blog post on Wednesday that it had received the license from the Bermuda Monetary Authority, the island nation’s integrated financial regulator, which was one of the first in the world to roll out a comprehensive legal framework for digital assets in 2018.

Coinbase plans to launch an offshore derivatives exchange in Bermuda as soon as next week, according to a person close to the company.

The news follows a report by Bloomberg in March that Coinbase Global has approached institutional clients about a new offshore trading platform, working with market makers and investment firms to launch such a service apart from the primary Coinbase marketplace. The Block shortly thereafter cited multiple sources in reporting that “Perpetual swaps — a type of futures and a popular product in the crypto space — will be among the offerings.”

Perpetual swaps and other exotic crypto-related derivatives make up a large part of daily trading activity, but are mostly unavailable in the US due to regulatory restrictions.

By launching an offshore exchange in Bermuda, San Francisco-based Coinbase will be better equipped to challenge Binance, which dominates global crypto trading, and diversify its revenue base.

In response to a request for comment, a Coinbase spokesperson referred Fortune to Wednesday’s blog post, which also revealed plans to expand operations in Abu Dhabi as part of a strategy it calls “Go Broad & Go Deep.”

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News of the Bermuda license comes a day after Coinbase CEO Brian Armstrong warned that crypto firms may seek to move offshore in the absence of a clear regulatory framework in the US

Coinbase is unlikely to have any immediate plans to leave the US given that it has for years touted its compliance record in its home country, and is widely seen as law-abiding by politicians and regulators. Another major US company, Ripple, issued similar warnings that it could raise stakes in 2021, but has yet to follow through.

But while an immediate exodus of major US crypto companies is unlikely in the near future, Coinbase’s move to set up shop in Bermuda suggests the industry is increasingly looking to places like Hong Kong, Dubai and Singapore – all of which have designated themselves as crypto hubs – as the industry’s primary place of business.

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