Coinbase, the largest crypto exchange in the US, has been facing a lot of regulatory trouble. Recently, the company’s CEO, Brian Armstrong, said that they might have to leave the United States if the regulatory uncertainty persists and change their headquarters to a different country. And now that country might also be Bermuda as Coinbase successfully acquires the license to operate there. They will soon start offering their services in the country.
Coinbase acquires Bermuda license
In a recent blog post, Coinbase reported that they had received the green light from the monetary authority of Bermuda to operate in the country. They are all set to launch a derivatives exchange in the country. Bermuda’s Monetary Authority has provided the exchange with a Class F license which allows Coinbase to coduct multiple range of activities including token issuance and sales. There is also no restriction to operate both as a normal and derivative exchange. Reports suggest that the laucnh of the exchnage in Bermuda could happen as soon as next week.
Coinbase’s expansion in different countries and especially Bermuda which is a tax haven for companies with zero tax rate, after the annoucement of moving out of the US, is important. This builds upon Brian’s statement made in the London fintech event. However, it would be good if the SEC considers this and tries to provide some more clarity on the regulation.
Coinbase has a very good argument in favor of leaving the US. They have been fearing that sooner or later they will be hit with a lawsuit and maybe fined. Brian Armstrong also said that the lack of clarity is also the reason that many exchanges are operating in the US while having their headquarters outside. This keeps them outside the jurisdiction of the US SEC and that leads to more trouble like what happened with FTX. And the ones that are diligently operating in the US like Coinbase face all the trouble.
What is the regulatory trouble all about?
Coinbase is not the only platform that is considering moving out of the US. Even another crypto exchnage, Bittrex has announced plans to move out of the US by the end of April all because of the regulatory troubles they are facing. Brian Armstrong explained why the US has such a rocky landscape in terms of regulation. He said that while the UK and many other countries have only one regulatory body to regulate crypto, in the US we have multiple authorities like the SEC, CFTC and more. This creates a lot of complexities as some tokens are claimed to be securities by the SEC and commodities by the CFTC. For a exchange that’s a tough thing to deal with.
Brian also clearly said that it is not possible to operate in an environment where the SEC and CFTC are giving them contradicting statements every other week. And it looks like the Securities and Exchange Commission cares more about serving notices then helping the business. This is the reason why Coinbase never received a feedback from them even after meeting dozens of times. But as soon as they received the Wells Notice, the SEC gave their feedback.
It will be important to see if Coinbase does move out of the United States. And if they do then how their stock reacts to the news. What are your thoughts on the same? And what do you think will be the best course for Coinbase from here? Let us know in the comments below. Also, if you found our content informative do like and share it with your friends.