Coinbase has launched a new perpetual futures exchange targeting non-US institutional investors and traders, in an effort to diversify its revenue and capture a larger share of the crypto market.
The Coinbase International Exchange will initially list bitcoin (BTC) and ether (ETH) perpetual futures later this week, settling all trading in USDC without requiring fiat on-ramps, Coinbase said in a statement shared with Blockworks.
It follows reporting last month that the exchange was said to be eyeing a derivatives push in overseas jurisdictions including Abu Dhabi while securing licensure in Bermuda, where the new exchange will be established.
Bermuda’s regulatory framework is known for its transparency, compliance, and cooperative approach, the exchange said. The Bermuda Monetary Authority (BMA), which regulates financial services in Bermuda, is an active member of a number of international organizations.
The BMA also maintains “close relationships” with other regulatory agencies globally, Coinbase said.
“Coinbase is committed to the US, but countries around the world are increasingly moving forward with responsible crypto-forward regulatory frameworks,” Coinbase said in a statement.
“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.”
That trend has been largely the result of US SEC chair Gary Gensler’s approach to crypto regulation, which has angered the industry and prompted vocal opposition. Coinbase itself has sued the regulator in what it’s calling an attempt to seek clarity on digital asset regulation.
While Coinbase has sought to diversify regulatory risk it’s also seeking to diversify its dependency on spot trading revenues which, at times, have hammered its share price based on poor quarterly performances. Perpetual futures account for up to 75% of global crypto trading volume, the exchange said.
Round-the-clock risk management, typical liquidity provisions from market makers and dynamic margin requirements will make up some of the exchange’s features. Coinbase also said its exchange will incorporate a liquidation framework that meets strict compliance standards in addition to being “well-capitalized” in the event of destabilizing market events.
Coinbase’s perpetual contracts will offer up to 5x leverage and direct access trading via API is available to institutional clients outside the US. The products are not yet available to retail customers.
It is unclear whether Coinbase intends to make its latest exchange available to retail investors. Blockworks has reached out for further clarification.
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Source: https://blockworks.co/news/coinbase-international-futures-institutional-traders