Coinbase Expands EU Presence with Strategic Derivatives Trading Acquisition| Trending Viral hub

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Coinbase, a leading figure in the field of cryptocurrency exchange, has announced a major expansion plan within the European Union (EU). The company aims to introduce crypto-linked derivatives to the EU market, marking a strategic move to diversify its financial product offering.

The company, in a report to CNBC, revealed that it is in the process of acquiring a holding company that comes with a MiFID II license. This license is a critical aspect under EU financial regulations, particularly after the review of MiFID II in 2017. The updated regulation, which originally had a strong focus on equities, was expanded to cover a broader range of financial instruments. , including derivatives, fixed income, and currencies. This movement is in line with Coinbasethe continuous effort to expand its services, especially by offering sophisticated financial products to its institutional and professional client base.

This license would help expand access to our derivative products by allowing Coinbase to offer them to eligible European customers in select EU countries.

The successful integration of this acquisition will mark Coinbase’s first foray into the derivatives trading space within the European Union. This step is a testament to the company’s commitment to expanding its service portfolio and its strategic growth in the global financial market.

About Coinbase

A renowned name in the cryptocurrency exchange industry, Coinbase offers a variety of services, including cryptocurrency trading and wallet functionalities. Coinbase’s main sources of income come from transaction fees and interest accrued on USDC reserves. This is a result of its partnership with Circle, the issuer of the stablecoin. This revenue model closely links Coinbase’s financial performance to the dynamics of market trends and changes in interest rates.

Like us recently reported that the company occupies an important position in Cathie Wood’s investment strategy Ark fund, highlighting its importance in the field of cryptocurrency investments.

Under Armstrong’s leadership, Coinbase has consistently prioritized strategic development, focusing on building a reputable and reliable platform. This strategy has been instrumental in establishing Coinbase as the leading cryptocurrency exchange in the United States, leading in terms of trading volume.

The company’s financial results for the third quarter showed a solid increase, with sales increasing 14% to $674 million. This growth was driven by a balanced mix of transaction revenue and subscription services. Rising revenue from subscriptions and services, especially interest income on USDC reserves, has played a critical role in the company’s growth trajectory. Furthermore, during this period, Coinbase has made notable progress in its international expansion efforts, venturing into new markets such as Canada and achieving registration as a cryptocurrency exchange with the Bank of Spain, thus expanding its reach in the global market.

Offering crypto derivatives trading

With the acquisition of the MiFID II license, Coinbase will be positioned to offer regulated derivatives, including futures and options, to its clients in select EU countries. This acquisition, pending regulatory approval, is expected to be completed in 2024. In a statement on its blog, Coinbase expressed that this license will significantly enhance its ability to offer derivatives products to eligible European customers in select EU countries. The company emphasized its commitment to adhering to the highest standards of regulatory compliance, stating that before any license goes live or any user is served, the entity must align with Coinbase’s Five-Point Global Compliance Standard.

The importance of derivatives trading in the cryptocurrency market cannot be understated, as Coinbase notes that such trading accounts for 75% of all cryptocurrency trading volumes. Despite facing stiff competition from larger market players such as binance, which dominates the cryptocurrency-linked derivatives market, Coinbase is determined to carve out a niche in this essential sector. Regulatory restrictions in the United Kingdom currently prevent Coinbase from offering crypto derivatives products there. However, the company offers commercial operations bitcoin and ether futures in the United States and various non-U.S. markets.

What are derivatives?

Derivatives, by definition, are financial instruments whose value depends on the performance of an underlying asset. Futures, a category of derivatives, allow investors to speculate on the future value of assets. The volatile nature of cryptocurrencies, along with the potential for significant gains and losses through leverage, makes futures trading generally riskier than trading in spot markets.

Coinbase’s foray into derivatives aligns with its broader international expansion strategy, particularly in light of regulatory challenges in the United States. The company faces a lawsuit from the U.S. Securities and Exchange Commission over allegations of securities law violations. In response, Coinbase has been actively seeking growth opportunities in international markets. Ireland has been chosen as its main regulatory base in the EU, and the company is in the process of applying for a single MiCA license, in preparation for upcoming cryptocurrency laws. Coinbase also acquired a virtual asset service provider license in France, allowing it to offer crypto asset trading and custody services in the country.

Recently, Coinbase announced that it received regulatory approval to offer perpetual futures trading services to retail customers outside the United States. This development underscores Coinbase’s commitment to expanding its global presence and offering a diverse range of cryptocurrency-related services to its international clientele.

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