Coinbase is looking to broaden its derivatives offerings within the European Union by acquiring a Cyprus-based entity that holds a Markets in Financial Instruments Directive 2014 (MiFID II) license.
MiFID II is the EU’s revised framework for regulating financial instruments. Updated in 2017, this legislation expanded its focus beyond stocks to include other asset classes such as fixed income, derivatives, and currencies.
A recent blog post revealed that with a MiFID II license, Coinbase will be able to provide regulated derivatives, including futures and options, in the EU. The company is already engaged in spot trading of Bitcoin (BTC, currently priced at $43,694) and other cryptocurrencies.
Coinbase’s acquisition in Cyprus aligns with its “Five-point Global Compliance Standard,” which encompasses Anti-Money Laundering (AML), Know Your Customer (KYC) protocols, enforcement of global sanctions, adherence to governance best practices, and continuous monitoring and reporting.
Derivatives, which account for 75% of total cryptocurrency trading volumes, are a key focus for Coinbase. These financial instruments derive their value from an underlying asset, index, or rate. Despite its ambitions, Coinbase faces tough competition in the derivatives market from larger entities like Binance, Bybit, OKX, and Deribit.
Facing challenges in the United States, its home country, Coinbase is actively seeking global expansion. The company is currently embroiled in a lawsuit with the U.S. Securities and Exchange Commission over alleged violations of securities laws.
In October 2023, Coinbase chose Ireland as its primary regulatory base in the EU, in preparation for the forthcoming Markets in Crypto-Assets Regulations (MiCA). The company has applied for a MiCA license and aims to obtain it by December 2024, coinciding with the full implementation of these EU rules.
Additionally, in December, Coinbase secured a virtual asset service provider license in France, enabling it to offer crypto asset custody and trading services in the country.
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