Coinbase Plans to Offer Crypto Derivatives in Europe

Coinbase plans to purchase a Cyprus-based company to offer cryptocurrency-linked derivatives in the European Union.

America’s largest crypto firm announced the plans on its blog Friday (Jan. 5), saying the agreement with the unidentified company would give it access to a MiFID (Markets in Financial Instruments Directive) license. MiFID refers to the European Union’s (EU) licensing regime for investing services and activities.

“This license would help expand access to our derivatives products by allowing Coinbase to offer them to eligible European customers in select countries across the EU,” Coinbase wrote.

“As the industry leader in trusted, compliant products and services, we aim for the highest standards for regulatory compliance, and before operationalizing any license or serving any users, this entity must achieve our Five-point Global Compliance Standard.”

The blog entry said Coinbase has a “long road” before it finalizes the acquisition, which is expected to close sometime this year.

During Coinbase’s earnings call in November, CEO Brian Armstrong spoke of the company’s plan to introduce derivatives products. He said that the global derivatives market for crypto accounts for 75% of all trading volume, presenting a major opportunity for Coinbase.

The company has already gotten regulatory approval to offer derivatives products to both non-U.S. retail customers and eligible U.S. customers.

Meanwhile, Coinbase and other crypto exchanges last week instituted risk assessments and finance tests for their users in the United Kingdom.

As noted here, those measures were in response to new government regulations requiring crypto firms to notify users about the risks associated with trading cryptocurrencies and to advertise their services responsibly.

Beginning Monday (Jan. 8), customers of these exchanges will have to complete a declaration about their investor profile that asks users to identify themselves as either high net worth individuals or restricted investors.

These measures follow the U.K.’s Financial Services and Markets Act, which now covers companies that offer cryptocurrencies and stablecoins, regulating them under the same umbrella as traditional financial services.