Coinbase Debuts Offshore Exchange as US Relations Cool

Coinbase has launched an international cryptocurrency exchange as it contends with rising tensions with regulators.

Coinbase International Exchange, announced Tuesday (May 2) on the company blog, will let institutional users based in eligible jurisdictions outside of the U.S. trade perpetual futures, which Coinbase said accounted for almost three-quarters of worldwide crypto trading volume in 2022.

“Building out a global perpetual futures exchange for digital assets will help support an updating of the financial system by making Coinbase’s trusted products and services more accessible to users of digital assets who live outside of the U.S.,” Coinbase said.

“As more and more markets are moving forward with regulatory frameworks to become crypto hubs, we believe the moment is right to launch this international exchange.”

The launch, made possible by Coinbase’s recent licensure by the Bermuda Monetary Authority, comes six weeks after the reports that the company was considering building a crypto marketplace outside the U.S.

Coinbase has found itself in the crosshairs of the Securities and Exchange Commission (SEC) after getting a Wells Notice from the agency in March related to the exchange’s listing of potential unregistered securities on its platform.

As PYMNTS has reported, these notices don’t immediately signal wrongdoing, but often come ahead of legal action by regulators.

Coinbase CEO Brian Armstrong said last week that the company was willing to work with the government, but noted it was also ready to go to court if necessary.

“We’re going to work with multiple regulators to make this industry safe and trusted, and a Wells notice at this stage, when there is not a clear rulebook, is not constructive and it’s not good for America,” he said.

“We are prepared to defend that position in court, but it doesn’t have to come to that. We welcome a true dialogue about a workable path forward for our industry.”

Armstrong had warned last month that crypto firms would set up shop in “offshore havens” if the U.S. and the United Kingdom don’t establish clear regulations.

“Anything is on the table, including relocating or whatever is necessary,” Armstrong said at an industry conference in the U.K. when asked by former British Chancellor George Osbourne if the CEO could see Coinbase leaving the U.S.

“I think the U.S. has the potential to be an important market for crypto, but right now we are not seeing that regulatory clarity that we need,” he said. “I think in a number of years if we don’t see that regulatory clarity emerge in the U.S., we may have to consider investing more elsewhere in the world.”

Nevertheless, Coinbase insisted in the blog entry that it was still committed to the U.S., despite what it called “regulation by enforcement which has led to a disappointing trend for crypto development” stateside.