Cryptocurrency exchange heavyweight, Coinbase, has unveiled plans to acquire a Markets in Financial Instruments Directive (MiFID)-licensed entity based in Cyprus. This strategic acquisition is aimed at expanding Coinbase’s derivatives offerings across the European Union.
The acquisition, which is still subject to regulatory approval, is expected to significantly boost Coinbase’s market presence by 2024. The company is set to acquire an unnamed holding company that holds a MiFID II license. The MiFID II is an updated EU regulation governing financial instruments, which was revised in 2017 to address concerns about its focus on stocks, neglecting other asset classes such as derivatives, fixed income, and currencies.
This move is in line with Coinbase’s long-standing ambition to cater to professional and institutional customers. Coinbase, which was founded 12 years ago, has been actively seeking to expand its offerings to institutions like hedge funds and high-frequency trading firms. The company aims to capitalize on the larger transaction sizes typically associated with these types of traders.
Upon completion of the deal, and pending regulatory approval, Coinbase will launch derivatives trading in the EU for the first time. The company expects the deal to close later in 2024. Coinbase has stated that the MiFID II license will “expand access to our derivatives products by allowing Coinbase to offer them to eligible European customers in select countries across the EU.”
This expansion into the EU market is expected to significantly impact Coinbase’s position. The introduction of cryptocurrency derivatives is seen as a strategic move to enrich trading choices for European customers. This development comes at a time when the European Banking Authority (EBA) is intensifying efforts to assess the potential impact of strains in non-bank financial institutions (NBFIs), with a particular focus on cryptocurrency-related entities, aiming to enhance the resilience of the EU’s banking sector.
Derivatives are a key focus for Coinbase, constituting 75% of total crypto trading volumes. Despite the company’s efforts to compete, it faces stiff competition from prominent players in the derivatives markets such as Binance, Bybit, OKX, and Deribit.
Derivatives, as financial instruments deriving value from the performance of underlying assets, indices, or rates, continue to be a pivotal aspect of Coinbase’s growth strategy within the legal frameworks of its markets.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | Europe |
| Countries | 🇨🇾 |
| Sentiment | neutral |
| Relevance Score | 1 |
| People | None |
| Companies | European Union, OKX, Coinbase, Deribit, Bybit, European Banking Authority, Binance |
| Currencies | None |
| Securities | None |
