The reported site would be a way for Coinbase to hedge its bets against a coming onslaught of crypto regulation that could prove very unfriendly indeed.
Listen to the CoinMarketRecap podcast on Apple Podcasts, Spotify and Google Podcasts
Coinbase is planning to set up a new trading venue outside of the U.S., according to reports.
The exchange has announced plans to accelerate its "Go Broad, Go Deep" international strategy over the following two months, launching new products and services in markets on six continents.
Coinbase has started talking to its existing international clients including market makers and institutional investment firms about setting up a separate platform headquartered outside the U.S., Bloomberg reported.
While Coinbase is already operating in more than 100 countries, all of those subsidiaries funnel clients to the same U.S. trading platform.
With a 24-hour trading volume of $2.8 billion in the past 24 hours, Coinbase is currently the second-largest spot exchange by volume — although it's a distant second behind Binance, which had 11 times the volume. CoinMarketCap is owned by Binance.
But it is barely in the very lucrative crypto derivatives business with its fledgling Coinbase Derivatives Exchange, a Commodity Futures Trading Commission-regulated platform it acquired in January 2021. That would change with the new global trading venue, which would offer derivatives as well as spot trading, sources told The Block.
An internationally headquartered platform would also offer the company an alternative to the the U.S., which is engaged in a regulatory crackdown that strengthened with the bankruptcy of Sam Bankman-Fried's FTX exchange and redoubled last week with the collapse of three crypto-related banks, including the two most important, Silvergate Bank and Signature Bank.
And it is coming off a horrible 2022. The Nasdaq-listed exchange saw a net loss of $2.6 billion on revenues of $3.15 billion — well under half of 2021's $7.35 billion.
Follow the Regulations
The new platform would focus on "high-bar regulatory jurisdictions," Coinbase said. That would include the U.K., SIngapore, and the EU, where the Markets in Crypto Assets (MiCA) regulatory package just passed.
A week after its recent "Go Broad, Go Deep" announcement, Coinbase pointed to the U.K. as a potential global crypto hub.
It said that recent moves by the Treasury and Exchequer show "that they are delivering on this commitment and recognise that digital assets and crypto will be a central pillar to future-proofing the competitiveness of the UK's financial centers."
Other destinations mentioned as aiming to become crypto hubs in the "Go Broad, Go Deep" announcement were Brazil, the UAE, Australia, Hong Kong, Switzerland, Bermuda and Japan.
Coinbase CEO Brian Armstrong long cultivated a strong relationship with regulators, and has argued that strong, clear regulation will be good for crypto. In early March he called building a U.S. regulatory framework "a matter of national security." Without one, Armstrong said:
"The U.S. risks falling behind both technologically and politically."
He has clashed with regulators several times recently, notably over a number of issues related to the Securities and Exchange Commission's (SEC) claim that nearly every cryptocurrency is a security.
Yield-bearing staking accounts like Coinbase Earn are another, with Armstrong saying earlier this month that he's "hearing rumors" that staking could be banned outright — and promising to fight such a ruling in court.<div><iframe width="100%" height="166" scrolling="no" frameborder="no" allow="autoplay" src="https://w.soundcloud.com/player/?url=https%3A//api.soundcloud.com/tracks/1472982877&color=%23ff5500&auto_play=false&hide_related=false&show_comments=true&show_user=true&show_reposts=false&show_teaser=true"></iframe></div>
