Coinbase Leaving U.S. Soil with License to Operate Offshore

Coinbase has been campaigning against U.S. regulations and may be fed up with the fight.

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  • Coinbase is putting a lot of work into its global expansion.
  • The exchange has procured a license to operate away from the U.S. with its hostile regulations.
  • There is a growing feeling that a crypto exodus may be taking place from the U.S.

The regulatory landscape in the U.S. has been declared hostile by a number of major crypto firms in the States. Coinbase has been fighting against the current ‘regulation by enforcement’ it has faced and is now looking for other opportunities elsewhere. 

In a company blog post, Coinbase revealed it had received a license to operate in Bermuda. Coinbase outlines the license acquisition as part of its global scaling but also signals the company’s plans to operate with less pressure from U.S. regulations.

Opening Up New Opportunities

Not only are U.S. regulations hostile, but they are also consulted and confusing, according to Coinbase and other firms like Ripple. Not having a codified legal framework, like Bermuda, means Coinbase struggles to roll out new offerings and crypto products.

Sponsored

According to a person close to the company, as reported by Fortune, Coinbase plans to launch an offshore derivatives exchange in Bermuda as soon as next week. Another report states that Coinbase will offer perpetual swaps—a type of future and a popular product in the crypto space.

Perpetual swaps and other crypto-related derivatives are important tools in bolstering daily trading activity but are predominantly unavailable in the U.S. due to regulatory restrictions.

A Crypto Exodus

The regulatory restrictions have slowed innovation and progression for companies like Coinbase, with Ripple CEO Brad Garlinghouse stating a ‘crypto exodus’ is already ongoing. Other exchanges, such as Kraken, seek overseas opportunities after obtaining a license to operate in Ireland. 

Kraken’s senior managing director for global operations, Curtis Ting, explained that the push to leave U.S. shores has been ongoing for around two years. 

“This is definitely a trend that’s gotten more noticed though [crypto companies looking beyond the U.S.],” Ting told Fortune, “particularly as an antithesis to other jurisdictions that have taken a more chaotic approach. The flight to places like Europe is on the basis of clarity.”

On the Flipside

  • At the heart of the U.S. regulatory crackdown is the SEC, with its chairperson Gary Gensler adamant that there is regulatory clarity and that crypto companies are choosing to be non-compliant. 

Why You Should Care

The battle for regulatory clarity will likely be ongoing. Still, the fact that there are more welcoming global jurisdictions that can foster better crypto innovation should be cause for concern for the U.S. if it wants to be a tech leader in this FinTech space. 

FAQs

Does Coinbase only operate in the US?

Coinbase is a U.S.-based company that operates under the country’s legislation and licensing. However, it is available to use in over 100 other countries. Recently, Coinbase acquired a license to operate in Bermuda.

Does Coinbase report to the IRS?

As a U.S. company, Coinbase will be bound to comply with all U.S. regulatory bodies and structures. This includes the IRS.

Is it safe to leave USD in Coinbase?

Coinbase is a well-established and regulated cryptocurrency exchange where it is possible to store USD safely, However, like any financial service, it is important to exercise caution when keeping your money on a platform.

Read more about Coinbase’s battles with the SEC:

Coinbase Draws SEC’s Ire as Major Exchange Faces Lawsuit

Read more about Cardano’s growth in Q1 2023:

Cardano’s TVL Almost Triples in Q1; ADA Market Cap Rises 50%

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Darryn Pollock

Darryn Pollock is a South African-born, UK-based journalist and content writer for DailyCoin with a focus on regulation and legislation revolving around the cryptocurrency space. He has covered the evolving crypto regulatory space, and examined how the US has approached law-making to offer protection in the growth of innovation. Darryn values traditional journalistic principles of truth, accuracy, independence, fairness, and impartiality, and has a Bachelor of Arts degree in Journalism and Law from Rhodes University in South Africa.