Key Insights
- Coinbase acquiring Cyprus firm for EU derivatives license to offer futures, options
- Comes as exchange faces regulatory lawsuit in US, builds operations across Europe
- Key license bypasses need for country-by-country permissions under EU rules
DUBLIN – Coinbase, the largest U.S. cryptocurrency exchange, is aggressively targeting the European Union market by acquiring a Cyprus-based firm owning a coveted EU derivatives license as it awaits regulatory headwinds back home.
The license under Europe’s Markets in Financial Instruments Directive (MiFID II) allows provision of complex products like Bitcoin futures alongside existing Coinbase spot trading in Britain and the wider EU, the company announced this week.
Crucially it sidesteps cumbersome country-by-country permissions that have long complicated EU growth plans for foreign financial platforms. The move comes as regulatory scrutiny ramps up stateside.
Coinbase remains locked in a lawsuit against the U.S. Securities and Exchange Commission over allegations it offered unregistered securities. That led the $57 billion crypto giant to begin establishing European operational bases last year.
Derivatives make up 75% of total crypto trading volumes, so are essential to Coinbase’s expansion, CEO Brian Armstrong said this week, noting fierce competition from players like Binance and OKX.
An Ireland hub to house EU business has been chosen already, with a 2024 application pending under the Markets in Crypto-Assets (MiCA) regulations set to harmonize trading standards across all 27 member states.
That promises a unified playing field viewed as critical for unlocking mass adoption by both users and platforms. If secured, Coinbase can passport activities into major continental economies using the Irish license.
France has separately granted approval for Coinbase to offer crypto custody and trading from Paris as part of that bridgehead strategy – providing failsafe jurisdiction as Brussels’ bureaucracy grinds.
How swiftly and smoothly EU oversight evolves remains uncertain, but analysts saw Coinbase’s Cyprus derivatives gambit as cunning manoeuvring towards first-mover advantage whatever the pending regulatory shifts.
Acquiring these European approvals would be a crucial milestone, CEO Armstrong said this week, as the company cements structures to ride coming crypto waves on steadier legal footing abroad.