While Coinbase aims to compete in the EU derivatives market, it faces stiff competition from more prominent players like Binance, Bybit, OKX and Deribit.
Coinbase aims to expand its derivatives offerings in the European Union by acquiring a Markets in Financial Instruments Directive 2014 (MiFID II)-licensed entity in Cyprus.
MiFID II refers to the EU’s updated rules governing financial instruments.
The EU updated the legislation in 2017 to address criticism that it was too focused on stocks and didn’t consider other asset classes, like fixed income, derivatives and currencies.
According to a blog post, Coinbase can begin offering regulated derivatives in the EU,
like futures and options, with a MiFID II license. The company already offers spot trading in Bitcoin
and other cryptocurrencies.
Coinbase stated that acquiring the Cyprus-based entity ensures compliance with its
“Five-point Global Compliance Standard,” covering Anti-Money Laundering (AML),
Know Your Customer (KYC), global sanctions enforcement, governance best practices and ongoing monitoring and reporting.
Derivatives are a crucial focus for Coinbase, constituting 75% of total crypto trading volumes.
While Coinbase aims to compete, it faces stiff competition from more prominent players in the
derivatives markets like Binance, Bybit, OKX and Deribit.
Derivatives are financial instruments that derive their value from the performance of an underlying asset, index or rate.
Coinbase has been actively pursuing global growth due to challenges in the United States,
where it is based. It is currently involved in a lawsuit with the U.S.
Securities and Exchange Commission, which accuses the exchange of violating securities laws.
In October 2023, Coinbase selected Ireland as its central regulatory hub in the EU in anticipation of the upcoming Markets in Crypto-Assets Regulations, or MiCA.
It has applied for a single MiCA license, and it aims to secure it by December 2024 when the EU fully implements the rules.
In December, Coinbase also obtained a virtual asset service provider license in France, which permits it to offer custody and trading in crypto assets in the country.