Bloomberg reported on March 17 that US-based cryptocurrency exchange Coinbase is considering setting up an offshore exchange following recent tightening of regulations on the cryptocurrency industry.
Coinbase has reportedly reached out to some institutional investors to discuss setting up alternative markets for global users. The location of this exchange is undecided, but Bloomberg report The company is also in touch with market makers for connectivity.
A Coinbase spokesperson declined to confirm whether the company has such plans. and said it would increase global crypto adoption.
Why Coinbase Is Considering Moving Offshore
Coinbase’s status as a public company imposes higher standards of regulatory oversight than many of its offshore-based competitors.
For context, rival exchanges such as Binance and the bankrupt FTX only have subsidiaries in the US, and most of their operations operate outside US jurisdiction.
Kraken CEO Jesse Powell sharp Benefits enjoyed by “offshore exchanges”. U.S. regulators tend to ignore the illegal activities of these companies, Powell said.
Coinbase operates in over 100 countries, but all transactions are routed through the US platform. This may change once we can establish an offshore trading platform and shield ourselves from domestic regulatory pressures.
Lack of U.S. Crypto Regulation Hits Regional Businesses
Over the years, several cryptocurrency insiders have criticized the United States for its lack of regulatory clarity and the regulatory-by-enforcement approach adopted by the U.S. Securities and Exchange Commission (SEC).
More recently, the failure of crypto-friendly banks has further undermined the ease of doing business for domestic companies. In addition, some stakeholders argue that the government is intentionally making life difficult for these companies.
US Rep. Tom Emmer has said the Biden administration is using market turmoil to kill cryptocurrencies.
Ripple CEO Brad Garlinghouse has warned that a lack of regulatory clarity has forced the company into more friendly jurisdictions.
“Crypto moving offshore is not good for American innovation.”
