Coinbase Crypto Exchange Considers Overseas Trading Platform Amid US Crypto Crackdown – Here’s What You Need To Know

Coinbase is considering setting up a digital asset exchange outside the US amid growing regulatory pressure and a deteriorating banking climate for crypto firms.

The largest cryptocurrency exchange in the United States has contacted its institutional clients about plans to establish a new crypto trading platform offshore, Bloomberg reported, citing three people familiar with the matter.

The report added that during talks with market makers and investment firms, the crypto exchange proposed setting up an alternative venue, away from the main Coinbase marketplace, for global customers. Coinbase has not yet decided where the new platform might be based.

Without confirming the plans, a Coinbase spokesperson said the exchange is considering geographic options and meeting “with government officials in high regulatory jurisdictions” as part of its mission to push for global crypto adoption.

Regulatory hostility in the US is growing amid the banking crisis

The potential expansion of Coinbase comes in the wake of increased regulatory scrutiny in the US. In particular, the SEC has stepped up efforts to reduce the risk that cryptocurrencies pose to the broader financial system by cracking down on crypto companies.

Back in February, the SEC reached an agreement with crypto exchange Kraken to stop offering staking services or programs to customers in the country and pay $30 million to settle allegations that it failed to “register the offering and sale of its crypto-active-stakes-as-a- service programme’, which the commission qualified as securities.

Furthermore, the agency has threatened Paxos, a US-registered firm that issues Binance’s stablecoin Binance USD (BUSD), with legal action over the issuance of BUSD tokens. The agency argued that BUSD is considered an unregistered security.

The SEC has also objected to the proposed $1 billion transaction by Binance.US to buy the assets of Voyager Digital, a collapsed cryptocurrency brokerage.

The environment for crypto firms in the US has further deteriorated with the closure of major crypto-friendly banks, including Silvergate Bank and Signature Bank.

Armstrong criticizes the SEC’s approach

Meanwhile, Coinbase CEO Brian Armstrong has warned that a hostile regulatory approach from the SEC could drive the crypto industry outside of the US.

The crypto chief said that almost all major financial hubs, including Singapore, Hong Kong, London and, most recently, the European Union, have introduced comprehensive crypto legislation, adding that the US should also follow suit if it does not want to lag behind. .

“What I think should happen in the US is that we need a clear rule book so that this industry can be built here. We don’t want it to be like 5G or semiconductors that went offshore. It’s actually a matter of national security we get the future for the financial system built right here in the United States.”

In particular, Coinbase has recently announced the launch of its own layer 2 blockchain for Ethereum called Base. L2 describes itself as a “secure, affordable, developer-friendly” way to build decentralized applications (dApps), and will serve as a home both for Coinbase’s own on-chain products and as an open ecosystem for developers.