- Gemini and Coinbase have launched overseas crypto derivatives exchanges
- Gemini Foundation and Coinbase International will serve dozens of countries outside the US, UK and EU
- Both exchanges have criticised the approach taken by US authorities over crypto regulations
Gemini and Coinbase both announced the launching of overseas exchanges yesterday as the increasing desire to move operations away from the US bears its first fruit. Coinbase announced an international perpetual exchange through its recently acquired Bermuda license, with 5x leverage available to users, while Gemini launched a derivatives platform open to more than two dozen entities with up to 100x leverage. Neither operation is open to UK, US or EU customers illustrates starkly the direction that exchanges are being forced to take in order to expand.
Coinbase Working With “Forward” Moving Regulators
Coinbase’s overseas offering, Coinbase International, comes just two weeks after it received a license to operate in Bermuda, and this is indeed where it has based its new entity. A blog post announcing the move noted that “more and more markets are moving forward with regulatory frameworks to become crypto hubs, [so] we believe the moment is right to launch this international exchange.” This is a veiled criticism of the US which is of course moving backwards with its regulation of the crypto markets.
Coinbase International will initially list Bitcoin and Ethereum perpetual futures with all trading settled in USDC and up to 5x leverage to begin with. Coinbase also confirmed that it will operate within the parameters of the Bermuda Monetary Authority, which it said has a “high level of transparency, compliance, and cooperation.”
Gemini Not Leaving US
Gemini, meanwhile, announced the launch of Gemini Foundation a week after it was first announced. The proposition is similar to Coinbase, but serving only Bitcoin contracts initially with leverage up to 100x. The platform will also offer the same lending services that got it into so much trouble at the back end of last year.
Gemini co-founder Tyler Winklevoss told Fortune that the group pulled their application for a US derivatives exchange after it was “made clear that it was not going to happen anytime soon”, with Winklevoss later describing the regulatory situation in the country as a “total logjam”, which explained their expansion abroad:
If we can’t do it in the U.S. right now—dramatically grow our business and bring crypto to folks here—that’s not going to stop us from bringing it globally.
Both Exchanges Subject of US Attention
Both Coinbase and Gemini have been targeted by US authorities in recent months, which has undoubtedly led them to look further afield for expansion. In January, the Securities and Exchange Commission (SEC) charged Gemini with the unregistered offer and sale of securities through its Gemini Earn lending service, while it was also sued by the Commodity Futures Trading Commission (CFTC) last year over its 2017 Bitcoin futures offering. However, Tyler told Fortune that these issues weren’t forcing Gemini out of its home country:
We’re not leaning out of the US, we’re just leaning into being a global company. If lawmakers could come together and build a clear framework for crypto companies, it would be a huge boon for the US, and a huge boon for consumers, innovators, and investors.
Coinbase, too, has been no stranger to US action. It has had a kind of running Cold War with the SEC over the supposed listing of securities which culminated in a Wells Notice being issued last month. Then there is the situation where the exchange asked for guidance over how to run its planned Earn program, received none and was then threatened with a lawsuit when it was about to launch.
In January it also settled a case with the New York State Department of Financial Services over alleged breaches of anti-money laundering laws.
