Coinbase Global Inc. has reportedly been in contact with its institutional clients about possibly setting up a new crypto-trading platform overseas. With the US cracking down on cryptocurrencies, market makers and investment firms are discussing the possibility of opening an alternative venue away from Coinbase’s main marketplace.
The Case for Heading Overseas
The firm has yet to decide on a location but has been speaking to market makers about connecting to the platform. A spokesperson declined to comment, though Coinbase is assessing their options and meeting with government officials in high-bar regulatory jurisdictions. With the US environment for digital-asset companies becoming increasingly tough, Coinbase is looking to expand globally, encouraged by the regulations in the EU and UK.
The exchange’s status as one of the most regulated exchanges in digital assets has enabled it to become a steady presence throughout crypto’s turbulent history, but this same status has also made it less flexible than peers operating in offshore jurisdictions. To hedge its bets against a hostile US environment, Coinbase may be launching an offshore trading platform to give international clients access to newer products and remain competitive.
What are the Benefits?
Coinbase is attempting to diversify their revenue stream away from trading fees in case their current efforts are met with regulatory challenges in the US. Their three businesses—custody, stablecoins, and staking—have been in the spotlight. The company’s revenue dropped to $629 million in the fourth quarter of 2022, a decrease from $2.5 billion a year prior, while their stock plummeted 80% since its peak in November 2021.
CEO Brian Armstrong recently told Bloomberg News that Coinbase is focusing on diversifying their revenues and embracing decentralization. He also noted the need for more regulatory clarity in the US. The company’s earnings report stated that they want to grant customers access to a variety of crypto assets and payment methods, as well as proprietary and third-party apps.