US Crypto Exchanges Coinbase and Gemini Launch Offshore Derivatives Exchanges – Ledger Insights

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Two top cryptocurrency exchanges, Coinbase and Gemini, have both gone live with offshore cryptocurrency derivatives platforms. The platforms are not available to US-based clients, and both have been accused by the US regulator, the SEC, of ​​trading in unregistered securities. Coinbase’s approach is considerably more conservative.

Yesterday, Gemini said that the Gemini Foundation is now active and trading dollar-based perpetual futures contracts for Bitcoin with up to 100x leverage. According to the fine print, the Gemini Foundation is governed by Singapore law, although Gemini is not licensed in Singapore. Singapore does not have a licensing regime for crypto derivatives, but spot trading is another matter. Notably, futures contracts are not available in Europe or the UK

As for Coinbase, it said it got licensed in Bermuda last month and today announced that its international exchange Coinbase is now live and supports perpetual futures contracts for Bitcoin and Ethereum. By crypto standards, the leverage it initially offers of 5x is conservative compared to Gemini and Binance up to 125x. It also currently restricts access to institutional clients.

Coinbase positioned its launch as part of its “Go Broad, Go Deep” strategy, unveiled nearly a year ago, to offer a crypto gateway in every country.

The exchange was keen to stress that it was not involved in proprietary trading on the platform, only market makers.

Crypto derivatives overshadow the spot market

When FTX collapsed last year, it was one of the biggest players in the derivatives market, where Binance has long held the top position. Coinbase is currently the second-largest spot crypto exchange, with daily revenue of around $1 billion in the past 24 hours. Binance’s normalized daily revenue is $4 billion, but its derivatives revenue is nearly $37 billion.

SEC Wells review at Coinbase

Following the collapse of FTX and other crypto organizations last year, the SEC has stepped up its enforcement activities, especially since it now has useful legal precedents.

The SEC sent Coinbase a Wells notice, a warning of possible legal action. Indeed, Coinbase is not a regulated exchange but, according to the SEC, it trades securities. The SEC considers most cryptocurrencies to be securities. The crypto exchange responded publicly last week.

“We want to see a clear market structure for trading crypto securities. Not all crypto assets are securities,” said Coinbase CEO Brian Armstrong. “We will work with multiple regulators to make this industry safe and reliable. And a well notice at this stage, when there are no clear rules, is not constructive. And that’s not good for America. We are prepared to defend this position in court.

The chief legal officer said he had repeatedly asked the SEC for its views on how securities laws applied to Coinbase, but said he had “mostly” no opinion. answer.

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