As a reminder, the SEC’s battle with the crypto industry has become a serious one in recent months. In the case of Coinbase, the regulator is not happy with the stacking platform, which it sees as an alleged securities offering. And that’s strange enough, since the Commission was inspecting Coinbase before the latter’s IPO in 2021.

It eventually came down to Coinbase filing a lawsuit against the SEC. The management of the trading platform is not happy with the lack of adequate regulation within the country. On top of that, the Commission ignored a request that the exchange sent to it back in the summer of 2022. Well, this document was supposed to bring clarity to the situation of the cryptocurrency industry in the US. Read more about this case study in a separate article.

Be that as it may, Coinbase is now launching outside the US.

New crypto exchange from Coinbase

In an interview with The Block, Coinbase representatives shared some interesting information about the new platform. It will be launched in Bermuda with the involvement of a large list of market makers and partner firms. Coinbase International Exchange is developing a position liquidation framework specifically for Coinbase that “will accurately meet all regulatory requirements”.

As a reminder, market makers are market participants that provide liquidity to the market. They are typically trading companies with large amounts of capital that are used to execute trades by users of a particular trading platform. For this, market makers receive commissions, which are their primary earnings from such activity.

Coinbase noted that about 75 percent of its crypto transaction volume in 2022 was with perpetual futures. It is the most popular trading instrument for margin trading cryptocurrencies with huge liquidity. In a nutshell, perpetual futures are an agreement to buy or sell an asset at a predetermined price with no future expiry date. In this scheme, holders of short or long positions pay a certain percentage to the counterparty, depending on market conditions.


It is important to understand that perpetual futures and other cryptocurrency derivatives are prohibited in the US. Because Bitcoin is considered a commodity, such transactions must take place on exchanges that are regulated and supervised by the Commodity Futures Trading Commission (CFTC). Well, that requires special registration, which cryptocurrency exchanges, given the peculiarities of US regulation, do not get.

The exchange's representatives stressed that it would not be able to register in the U.S., which is why Coinbase was forced to obtain a license in another jurisdiction to launch an international platform. The exchange stressed that Coinbase International Exchange is not intended to interact with U.S. citizens. If the latter were to trade crypto futures on the platform, the latter could be charged with violating US law and forced to pay a hefty fine.


The derivatives exchange will initially offer the ability to trade perpetual futures on Bitcoin and Etherium. Similar tools for other popular cryptocurrencies are promised to be added after the platform’s launch. Initially, traders will be able to trade with up to 5x leverage.

The launch of Coinbase International Exchange has been expected news since early this year, when the SEC started terrorizing various cryptocurrency companies. In particular, Coinbase itself had earlier received a Wells notice from the regulator – a report that a lawsuit was being prepared against the exchange for allegedly violating securities regulation laws in the US.

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Actually, it’s not just the SEC that is suing Coinbase – the exchange is currently involved in another lawsuit against plaintiff Michael Massel. The lawsuit was filed for unauthorized collection and improper use of customer biometric data, as well as violation of Illinois’ biometric privacy law, Decrypt reports.

Massel is seeking damages of $5,000 for each “intentional and negligent violation” of the Illinois Biometric Information Privacy Act (BIPA) and another $1,000 for every other violation his legal team can find.

The lawsuit alleges that the exchange’s collection of biometric data as part of its Know Your Customer or (KYC) practices violates the law in terms of both collecting and storing the information. Under BIPA, a company wishing to collect biometric data must inform a person in writing that such data will be collected. It must also specify the specific purpose and time period for which the information will be stored.

The client is also required to consent in writing and the exchange is allegedly required to keep public records of the specifics of the storage of biometric information. In addition, the lawsuit alleges that Coinbase collects biometric data to “further enhance Coinbase and its app-based online platform” while “improperly profiting” from that data.

Finally, the suit mentions that Coinbase “disclosed plaintiff’s biometric information to numerous third parties, including Jumio Corporation, Onfido, Inc, Au10tix LTD, Solaris AG and Liquid Co., Ltd.”

Against the backdrop of what is happening, Coinbase’s shares are not performing at their best. Over the past five days, their value has slipped 13 percent, while the rate has fallen 19 percent on a month-to-month basis.


We believe the launch of Coinbase's international crypto exchange is good news for the whole industry. First of all, it will create additional competition in the trading platform niche, which somehow sagged after the bankruptcy and collapse of FTX last November. In addition, the event will send a clear message to US officials. They need to understand that the current SEC policy does not promote innovation within the country and so far has done little more than drain capital and talent. Obviously, something must be done about it, as soon as possible.


What do you think about it? Share your opinion in our cryptochat of former rich people. There we look back at other important news affecting the decentralised asset industry.