Coinbase has disclosed its intention to acquire a Cyprus-based company with the aim of providing cryptocurrency-linked derivatives within the European Union (EU). The announcement, made on January 5 via the company’s blog, outlined the strategic move to secure a Markets in Financial Instruments Directive (MiFID) license from the non-disclosed company. MiFID is the regulatory framework governing investment services and activities within the EU.
Coinbase enlightens that obtaining this license would enable the expansion of its derivatives offerings to eligible European customers in major countries in the EU. The company mentioned its dedication to upholding the highest standards of regulatory compliance, emphasizing the need for the entity to meet Coinbase’s Five-Point Global Compliance Standard before any operationalization or user service.
While the acquisition is anticipated to be completed later in the year, the blog entry acknowledged the substantial steps and processes that Coinbase must navigate before finalizing the deal. In a November earnings call, Coinbase CEO Brian Armstrong had previously articulated the company’s strategic plan to enter the derivatives market, citing the significant opportunities presented by the global derivatives market, which accounts for 75% of all crypto trading volume.
Coinbase has already secured regulatory approval to offer derivatives products to both non-U.S. retail customers and eligible U.S. customers. Concurrently, in response to new government regulations in the United Kingdom, Coinbase and other crypto exchanges implemented risk assessments and finance tests for their users.
From January 8, effective measures will require customers to complete a declaration about their investor profile, distinguishing between high-net-worth individuals and restricted investors. Such actions align with the Financial Services and Markets Act in the UK, which now regulates cryptocurrency and stablecoin companies under the same framework as traditional financial services.
