According to a recent report by Bloomberg, Coinbase has explored the possibility of setting up a cryptocurrency trading platform in a jurisdiction outside United States agencies’ regulatory reach. The report suggests that the crypto exchange has discussed this potential move with institutional clients and market makers.
While the exchange only recently discussed establishing a crypto-trading platform outside the US regulatory sphere, the move would allow expanding its offerings to a global client base beyond its existing marketplace.
With increasing regulatory scrutiny and crypto-friendly banks shutting down operations less than a month apart, the climate for crypto platforms in the US has been worsening. In response to this crackdown against the industry, the largest crypto exchange in the US has taken steps to mitigate the impact on its operations.
A Solution For The Ongoing Regulatory Crisis For Coinbase?
Crypto companies in the US have been facing a challenging regulatory and banking environment, particularly in light of the Securities and Exchange Commission’s (SEC) recent allegations that certain crypto services offered within its jurisdiction constitute securities. This has made it difficult for trading platforms to operate smoothly.
On the other hand, establishing a crypto-trading platform in a jurisdiction outside of the US regulatory sphere could offer Coinbase access to new markets. This move could expand Coinbase’s reach and allow them to tap into previously inaccessible markets.
Establishing a new crypto-trading platform outside of the US could provide the exchange with the added benefit of diversifying its risks in case of any regulatory challenges in the US. In the event of SEC enforcement actions, having a presence overseas could help mitigate the impact on Coinbase’s operations.
Additionally, this move could increase the exchange’s liquidity for its institutional clients, providing them with more trading options.
What Are Coinbase Options For A New Location?
Although establishing a platform overseas could provide Coinbase with greater regulatory flexibility, the exchange will still need to navigate the regulatory landscape of the new jurisdiction, which may pose its challenges and requirements. So what are the options for establishing a unique venue for Coinbase?
Europe appears to be the most promising option for crypto firms in the wake of the recent banking crisis in the US, which has seen the closure of operations by Silvergate, Silicon Valley Bank, and Signature Bank, as reported by Bitcoinist.
In addition to Coinbase, several other crypto firms are reportedly exploring opening Swiss bank accounts amidst the ongoing banking crisis.
Switzerland’s banking and financial services industry has made it a hub for many cryptocurrency startups, and the country is widely recognized as a leader in the crypto industry. This makes Switzerland a potentially attractive location for Coinbase and other crypto firms seeking to establish a foothold in the region.
In recent years, Asian countries such as Japan have emerged as critical players in the cryptocurrency industry. Japan, in particular, has legalized cryptocurrency as a form of payment and has implemented regulations to safeguard consumers. The country’s forward-thinking approach to cryptocurrency has also made it an attractive destination for many crypto businesses looking to set up operations in Asia.
While it remains unclear where Coinbase will ultimately choose to establish its new crypto platform, the options of setting up overseas have been floated as a potential solution to the ongoing regulatory challenges faced by the industry.
With no indications of a slowdown in the SEC’s and other regulatory agencies’ approach toward the crypto industry, other firms may follow in Coinbase’s footsteps.
Feature image from Unsplash, chart from TradingView.com