According to new report by Bloomberg, Coinbase has explored the possibility of setting up a cryptocurrency trading platform in a jurisdiction outside the regulatory reach of the United States agency. The report indicates that crypto exchanges have discussed this potential move with institutional clients and market makers.
While the exchange only recently discussed creating a crypto-trading platform outside of the US regulatory environment, the move will allow it to expand its offering to a global client base beyond its existing markets.
With increasing regulatory scrutiny and crypto-friendly banks shutting down operations in less than a month, the climate for crypto platforms in the US has worsened. In response to this crackdown on the industry, the largest crypto exchange in the US has taken steps to reduce the impact on its operations.
A Solution To The Ongoing Regulatory Crisis For Coinbase?
Crypto companies in the US have faced a challenging regulatory and banking environment, particularly due to recent Securities and Exchange Commission (SEC) allegations that certain crypto services offered in the jurisdiction constitute securities. This makes it difficult for the trading platform to run smoothly.
On the other hand, creating a crypto-trading platform in a jurisdiction outside the US regulatory sphere could give Coinbase access to new markets. This move could expand Coinbase’s reach and allow them to tap into previously inaccessible markets.
Creating a new crypto-trading platform outside the US can provide exchanges with the added benefit of diversifying risks in the event of regulatory challenges in the US. In the event of SEC enforcement action, having an overseas presence can help mitigate the impact on Coinbase’s operations.
In addition, this move could increase exchange liquidity for institutional clients, providing more trading options.
What Are Coinbase Options For New Locations?
Although creating an overseas platform could provide Coinbase with greater regulatory flexibility, the exchange would still have to navigate the regulatory landscape in the new jurisdiction, which could pose challenges and requirements. So, what are the options to create a unique space for Coinbase?
Europe appears to be the most promising option for crypto companies due to the recent banking crisis in the US, which has closed operations by Silvergate, Silicon Valley Bank, and Signature Bank, as reported by Bitcoinists.
In addition to Coinbase, several other crypto companies are reportedly exploring opening Swiss bank accounts amid the ongoing banking crisis.
Switzerland’s banking and financial industry has become a hub for many cryptocurrency startups, and the country is widely recognized as a leader in the crypto industry. This makes Switzerland a potentially attractive location for Coinbase and other crypto companies looking to establish a foothold in the region.
In recent years, Asian countries such as Japan have emerged as critical players in the cryptocurrency industry. Japan, in particular, has legalized cryptocurrency as a form of payment and has implemented regulations to protect consumers. The country’s forward-thinking approach to cryptocurrency has also made it an attractive destination for many crypto businesses looking to establish operations in Asia.
While it is still unclear where Coinbase will ultimately choose to build its new crypto platform, the option of setting it up overseas has been floated as a potential solution to the regulatory challenges facing the industry.
With no indication of a slowdown in the approach of the SEC and other regulatory agencies towards the crypto industry, other companies may follow in Coinbase’s footsteps.
Feature image from Unsplash, chart from TradingView.com