Crypto exchange Coinbase has announced plans to launch crypto-linked derivatives in the European Union (EU). The US-based exchange is set to acquire a holding company with a MiFID II license, which will enable it to offer regulated derivatives in the EU. This move is part of Coinbase’s global expansion strategy, with the exchange currently only offering spot trading in the EU.
The MiFID II license, owned by an unnamed entity in Cyprus, is a highly regarded licensing framework governing investment services and activities. Introduced in 2007, the Markets in Financial Instruments Directive (MiFID) aimed to integrate Europe’s disparate financial markets and reduce trading costs. Its updated version, MiFID II, was introduced in 2017 to address criticism that it was too focused on stock and neglected other asset classes such as derivatives and currencies.
According to Coinbase, the acquisition of the MiFID II license will help it “expand access to our derivatives products by allowing Coinbase to offer them to eligible European customers in select countries across the EU.” The exchange has been trying to expand its offerings to institutions, including hedge funds and high-frequency trading firms, to benefit from the large-size transactions undertaken by such traders.
As part of its commitment to compliance, Coinbase has outlined a Five-point Global Compliance Standard that the entity must achieve before operationalizing any license or serving any users. This standard includes a vetted and trusted team, industry-leading anti-money laundering (AML) and Know Your Customer (KYC) standards, global sanctions enforcement, governance best practices, and ongoing rigorous monitoring and reporting. A team of over 400 compliance and legal professionals with experience from careers with the FBI, DOJ, OFAC, FinCEN, Scotland Yard, significant banks, and other key regulators design and oversee Coinbase’s Five-point Global Compliance Standards.
In a bid to expand its crypto-linked derivatives business, Coinbase previously pursued to acquire bankrupt crypto exchange FTX’s European entity. Until it collapsed, FTX Europe was the only entity offering a form of crypto derivatives called perpetual futures. Coinbase recently secured regulatory approval from the Bermuda Monetary Authority, enabling perpetual futures for eligible non-US retail customers.
While Coinbase acknowledges that there is a long road ahead before finalizing the acquisition and operationalizing the EU MiFID licensed entity, it views this as an exciting step forward in its efforts to expand access to its international derivatives offerings and bring a more global and open financial system to 1 billion people around the world.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | Europe |
| Countries | 🇺🇸 🇨🇾 🇧🇲 |
| Sentiment | positive |
| Relevance Score | 1 |
| People | None |
| Companies | OFAC, CNBC, Coinbase, FTX Europe, Scotland Yard, FinCEN, FBI, Bermuda Monetary Authority, DOJ |
| Currencies | None |
| Securities | None |
