Coinbase Expanding Derivatives Offerings in EU Amid Regulatory Challenges

Through the acquisition of the Markets in Financial Instruments Directive 2014 (MiFID II), a licensed firm in Cyprus, Coinbase intends to broaden the scope of its derivatives products within the European Union.

MiFID II refers to the new laws governing financial instruments in the European Union. In response to criticism that the regulation excessively focused on equities and neglected other asset classes, such as fixed income, derivatives, and currencies, the European Union (EU) revised the legislation in 2017.

Following a blog post, Coinbase can start providing regulated derivatives in the European Union (EU), such as futures and options, if it obtains a MiFID II license.

In addition to Bitcoin and other cryptocurrencies, the organization already provides spot trading services.

According to Coinbase, to buy the firm, it must ensure compliance with its five-point global compliance standard.

This standard addresses anti-money laundering (AML), Know Your Customer (KYC), global sanctions, and governance. Its international compliance standard, consisting of five points, provides a benchmark for compliance and operational integrity in the cryptocurrency market.

Coinbase places a significant emphasis on derivatives, which account for two-thirds of the total amount of cryptocurrency trading.

Even though Coinbase intends to compete, it is confronted with intense rivalry from more significant competitors like Binance and other companies such as Bybit, OKX, and Deribit. Derivatives derive their value from the performance of an underlying asset, index, or rate.

Derivatives are a type of financial instrument. As a result of difficulties in its market, Coinbase has been making concerted efforts to expand beyond its borders.

There is a case being filed against it by the United States Securities and Exchange Commission, which alleges that the company has violated securities laws.

In anticipation of forthcoming cryptocurrency rules known as Markets in Crypto-Assets (MiCA), the company decided in October to establish Ireland as its major regulatory hub operating within the European Union.

It has applied for a single MiCA license to obtain it by December 2024, which is the date when the EU will completely implement the rules.

Coinbase was also able to secure a license from France to operate as a virtual asset service provider in December.

This authorization enables Coinbase to provide custody services and trade cryptocurrency assets within the country.