San Francisco-based cryptocurrency exchange, Coinbase, is strategically positioning itself in the competitive crypto derivatives market, which constitutes a significant 75% of the total cryptocurrency trading volume. In pursuit of a stronger foothold in this lucrative sector, the platform is currently in the process of acquiring an undisclosed Cyprus-based company holding a European Union (EU) Markets in Financial Instruments Directive (MiFID) license.
The impending acquisition aims to facilitate the expansion of Coinbase’s derivatives business within the European market. The company disclosed its plans, emphasizing the intention to provide certified customers in the EU with access to a range of Coinbase derivatives products.
Coinbase is confident that its existing “Five Point Global Compliance Standard” aligns seamlessly with the operationalization of the MiFID license, ensuring a robust framework for serving EU customers. The compliance standard focuses on stringent staff vetting, adherence to anti-money laundering (AML) and know your customer (KYC) standards, sanctions compliance, governance best practices, and meeting monitoring and reporting requirements.
However, the successful completion of the acquisition is contingent upon regulatory approval, with the process anticipated to conclude later this year. This strategic move is part of Coinbase’s overarching global expansion plan, titled “Go Broad, Go Deep,” which aims to bolster the platform’s presence in key financial hubs displaying progressive regulatory frameworks for cryptocurrencies. The immediate priority markets include the EU, the UK, Canada, Brazil, Singapore, and Australia.
Despite Coinbase’s ambitious plans, it faces stiff competition in the derivatives market, particularly from industry giant Binance. According to CoinMarketCap data, Binance leads the pack with an impressive $54.5 billion in trading volume over the last 24 hours. In contrast, Coinbase lags behind, ranking as the 52nd largest exchange by derivatives trading volume, reporting $166.6 million during the same period.
The acquisition deal underscores Coinbase’s commitment to achieving growth in compliance with regulatory complexities. Successfully executed, it positions the company to tap into the substantial revenue potential presented by the EU crypto derivatives market, signaling a pivotal moment in Coinbase’s expansion strategy.
