Coinbase’s Offshore Trading Venue Reportedly To Offer Derivatives
Crypto exchange Coinbase is reportedly exploring the launch of an offshore platform to trade perpetual swaps tied to cryptocurrencies. Two sources familiar with the firm’s plans said that the move is aimed at breaking into a sector currently dominated by rival Binance.
TheBlock: Coinbase is exploring launching an offshore platform to trade perpetual swaps tied to cryptocurrencies. At present, the main cryptocurrency derivatives market is occupied by Binance OKX Bybit, among which Binance’s market share exceeds 50%. https://t.co/DrYkRFs4jt
— Wu Blockchain (@WuBlockchain) March 17, 2023
Perpetual Swaps on Offshore Platform
According to the sources, Coinbase has already briefed market-making and trading firms about its plans to roll out the platform in an offshore jurisdiction. Perpetual swaps, a popular product in the crypto space, will be among the offerings on the new platform. This type of future provides traders with a more capital-efficient way to make bets on the underlying crypto market.
In a statement, a Coinbase spokesperson said that the company is accelerating its “Go Broad, Go Deep” international strategy across six continents to better serve its global user base. The spokesperson added that the firm’s international expansion drive will focus on high-bar regulatory jurisdictions.
Binance Dominance
Binance currently commands the plurality of market share in bitcoin futures, according to The Block’s data dashboard. At its peak, FTX was also a large player in the market, with nearly 25% market share in early 2021.
Coinbase’s move into the perpetual swaps market could help the firm challenge Binance’s dominance. Last year, Coinbase acquired FairX, a CFTC-regulated derivatives exchange, and in 2021, applied for membership in the National Futures Association, a US self-regulatory organization for such businesses.
Regulatory Jurisdictions
Coinbase’s plans to launch an offshore platform come at a time when many regulators are looking to tighten their grip on the cryptocurrency industry. However, the company has made it clear that it will focus on high-bar regulatory jurisdictions in its expansion plans.
The launch of an offshore platform would allow Coinbase to reach a wider audience while also providing its users with a more diverse range of trading options. It remains to be seen when the platform will launch and which offshore jurisdiction Coinbase will choose.
