Coinbase Plans a Pivotal Acquisition, Eyes Crypto Derivatives Launch in EU

Coinbase plans to offer crypto-linked derivatives in the European Union, and it's planning to acquire a company with a license to do so.

The U.S. cryptocurrency exchange said that it entered into an agreement to buy an unnamed holding company which owns a MiFID II license.

It’s part of a long-standing ambition by Coinbase to serve professional and institutional customers.

The company, which began 12 years ago, has been seeking to expand its offering to institutions such as hedge funds and high-frequency trading firms over the last several years, looking to benefit from the much higher sizes of transactions done by these kinds of traders.

If and when Coinbase completes the deal, the move would mark the first launch of derivatives trading by the company in the EU.

With a MiFID II license, Coinbase will be able to begin offering regulated derivatives, like futures and options, in the EU. The company already offers spot trading in bitcoin and other cryptocurrencies.

The deal is subject to regulatory approval and Coinbase expects it will close later in 2024.

"This license would help expand access to our derivatives products by allowing Coinbase to offer them to eligible European customers in select countries across the EU," Coinbase said in a blog post.

"As the industry leader in trusted, compliant products and services, we aim for the highest standards for regulatory compliance, and before operationalizing any license or serving any users, this entity must achieve our Five-point Global Compliance Standard."

Coinbase said it would look to adhere to rigorous compliance standards that are upheld in the EU, including requirements related to combating money laundering, customer transparency and sanctions.

"We have a long road ahead before finalizing the acquisition and operationalizing the EU MiFID licensed entity, but this is an exciting step forward in our efforts to expand access to our international derivatives offerings and bring a more global and open financial system to 1 billion people around the world," Coinbase said in its blog post.

Coinbase also recently obtained a virtual asset service provider license from France, which gives it permission to offer custody and trading in crypto assets in the country.

(Source: CNBC)