Coinbase, one of the largest cryptocurrency exchanges in the world, has received a license to operate in Bermuda, signaling its intention to expand its international business. This move comes at a time when US regulators have become increasingly hostile towards the crypto industry.
In a blog post on Wednesday, Coinbase disclosed that it had received the license from the Bermuda Monetary Authority, the integrated financial regulator of the island nation. Bermuda was one of the first countries in the world to roll out a comprehensive legal framework for digital assets in 2018.
According to a person close to the company, Coinbase plans to launch an offshore derivatives exchange in Bermuda as soon as next week. This follows a report by Bloomberg in March that Coinbase had been contacting institutional customers about a new offshore trading platform, and working with market makers and investment firms to launch such a service apart from its primary Coinbase marketplace.
Perpetual swaps, a type of future and a popular product in the crypto space, will be among the offerings, according to multiple sources cited by The Block.
Perpetual swaps and other exotic crypto-related derivatives make up a large part of daily trading activity, but are largely unavailable in the US due to regulatory strictures. By launching an offshore exchange in Bermuda, Coinbase would be better poised to challenge Binance, which dominates the global crypto trade, and to diversify its revenue base.
In response to a request for comment, a Coinbase spokesperson referred Fortune to Wednesday's blog post, which also disclosed plans to expand operations in Abu Dhabi as part of a strategy it's calling "Go Broad & Go Deep."
The news of the Bermuda license comes a day after Coinbase CEO Brian Armstrong warned that crypto firms may seek to relocate offshore in the absence of a clear regulatory framework in the US.
It is unlikely that Coinbase has immediate plans to leave the US, given that it has for years touted its record of compliance in its home country and is broadly regarded as law-abiding by politicians and regulators. Ripple, another big US company, issued similar warnings that it could pull up stakes in 2021 but has yet to follow through.
However, Coinbase's move to set up shop in Bermuda suggests that the industry is increasingly viewing locations like Hong Kong, Dubai, and Singapore as the primary places of business. These locations have all touted themselves as crypto hubs, and they may become even more attractive if US regulators continue to clamp down on the industry.