Coinbase has received a license to operate in the offshore haven of Bermuda, signaling that the company is doubling down on plans to increase its international business at a time when U.S. regulators have become hostile to the crypto industry.
The company disclosed in a blog post on Wednesday that it had received the license from the Bermuda Monetary Authority, the island nation’s integrated financial regulator, which was one of the first 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.
The news follows a report by Bloomberg in March that Coinbase Global has 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. The Block soon after cited multiple sources in reporting that “Perpetual swaps—a type of future and a popular product in the crypto space—will be among the offerings.”
Perpetual swaps and other exotic crypto-related derivatives make up a large part of daily trading activity, but are for the most part unavailable in the U.S. due to regulatory strictures.
By launching an offshore exchange in Bermuda, San Francisco-based 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 U.S.
It’s unlikely that Coinbase has immediate plans to leave the U.S. given that it has for years touted its record of compliance in its home country, and is broadly regarded as a law-abiding by politicians and regulators. Another big U.S. company, Ripple, issued similar warnings that it could pull up stakes in 2021 but has yet to follow through.
But even if an immediate exodus of big U.S. crypto companies is unlikely in the near future, Coinbase’s move to set up shop in Bermuda suggest that the industry is increasingly viewing locations like Hong Kong, Dubai, and Singapore—all of which have touted themselves as crypto hubs—as the industry’s primary place of business.
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