Coinbase to Offer Crypto Derivatives in Europe

Coinbase intends to acquire a Cypriot company that will offer cryptocurrency-linked derivatives in the European Union.

Coinbase to Offer Crypto Derivatives in Europe

Information about the mentioned plan of the American crypto company was published on its blog at the end of last week. Coinbase announced that the deal with a certain Cypriot firm will allow it to gain access to the MiFID (Markets in Financial Instruments Directive) license. MiFID refers to the EU licensing regime for investment services and activities. There is no information about the Cyprus company yet.

Coinbase claims that the specified license will allow consumers to expand access to its derivative products by introducing them to the markets of individual EU countries. The company, being an industry leader in such aspects as compatible products and services, strives to comply with the highest standards of the regulatory framework. For the firm, resolving regulatory issues is a top priority in the process of putting into effect any license or starting to serve any customers.

A message posted on Coinbase’s blog late last week notes that the implementation of the acquisition of the Cypriot company will be a lengthy process, which is expected to be completed this year. The firm does not specify more precise dates.

During an earnings call in November, Coinbase CEO Brian Armstrong talked about plans to introduce derivative products. He stated that the global derivatives market for cryptocurrencies accounts for 75% of the total trading volume, which creates a large space of opportunities for his company.

The trading volume of futures contracts on Binance in 24 hours is more than $56 billion. In terms of this indicator, Coinbase is significantly inferior to its competitor. The volume of futures trading on the international derivatives exchange of this company in 24 hours is $300 million.

Coinbase has already received regulatory approval to offer derivative products to retail customers outside the United States and eligible consumers in the US.

Last week, the specified company and other crypto exchanges introduced risk assessment and financial tests for users residing in the United Kingdom. These measures are a response to the decisions of the British government that firms of the appropriate profile are required to notify consumers about the risks that arise in the process of trading cryptocurrencies. Also in the United Kingdom, the requirement for crypto companies to advertise their services responsibly was officially approved.

From Monday, January 8, British clients of crypto exchanges must fill out a declaration on their investor profile, in which they must identify themselves as wealthy individuals or as investors with restricted possibilities. The relevant requirements are provided by the U.K.’s Financial Services and Markets Act. This law applies to companies offering cryptocurrencies and stablecoins to customers. The sphere of digital assets uses the same regulatory mechanisms as in the space of traditional financial services.

Coinbase made its first step into the derivatives business in May. At that time, the company launched an international derivatives exchange in Bermuda.

As we have reported earlier, Coinbase Introduces Project Diamond to Enter the Abu Dhabi Global Market Sandbox.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.