Coinbase launches global crypto futures exchange for institutional investors

Coinbase, one of the largest cryptocurrency exchanges globally, on Tuesday announced the launch of an international cryptocurrency exchange. The platform will allow institutional investors — and not individual retail users — outside the US to trade ‘perpetual futures’ in Bitcoin and Ether. The latter are a type of futures contracts — a type of investing tool where institutions can make speculative bets on a commodity, in this case Bitcoin and Ether, in terms of what their prices could be at a future date.

In a press release, Coinbase said that the international exchange has received regulatory approval from Bermuda Monetary Authority. The company claimed that the exchange can provide diversified investment opportunities for investment firms while also offering liquidity — a key factor that investors consider.

Liquidity refers to the aspect of whether an investor can buy, sell and modify their holdings of a particular commodity. In the crash of cryptocurrency exchange FTX in November last year, the lack of liquidity caused by FTX reinvesting its customer holdings led to the exchange being unable to meet customer demands — in turn leading to a billion-dollar fallout and investigation of its founder, Sam Bankman-Fried.

Coinbase’s press statement claimed that perpetual futures accounted for three-fourths of the total global crypto trading volume last year.

“Building out a global perpetual futures exchange for digital assets will help support an updating of the financial system by making Coinbase’s trusted products and services more accessible to users of digital assets who live outside of the US. As more and more markets are moving forward with regulatory frameworks to become crypto hubs, we believe the moment is right to launch this international exchange,” it said.

The launch of the exchange comes at a time when its chief, Brian Armstrong, has spoken about wanting more favourable cryptocurrency regulations in the US, its home turf, without which the firm may consider shifting its primary operations to a different country. A report by Axios said that Coinbase’s largest volume of users come from the US at 40%, followed by the UK and Europe accounting for a further 25%.

The exchange will presently be available for institutional investors only, and will be available in select geographies. It is not clear as to which nations would the service be available in.

The launch comes at a time when the valuation and pricing of the world’s most popularly traded cryptocurrency tokens have been on the rise. According to data from market tracker CoinGecko, BTC has nearly doubled from around $15,700 in November last year to almost $30,500, while ETH also nearly doubled from $1,100 to over $2,100 in the same period.