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US Scrutiny Pushes Coinbase to Look to UAE

Coinbase is considering UAE as a potential crypto international hub, CEO Brian Armstrong said.

Photo by Robert Bock / Unsplash

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Coinbase Global opened an international exchange for bitcoin futures to increase its global presence as tensions rise between the cryptocurrency industry and US regulators.

Institutional investors in countries other than the United States will be able to utilize the exchange to buy and sell perpetual Bitcoin futures.

After opening an international exchange for Bitcoin futures, Coinbase Global is now weighing whether or not to establish a presence in the United Arab Emirates.

That comes as the crypto exchange is at odds with US regulators over cryptocurrency trading.

Brian Armstrong, CEO of Coinbase, expressed concern last month that crypto businesses might thrive in "offshore havens" if the United States and Britain did not provide clearer guidelines for the industry.

Coinbase, in a legal battle with the US Securities and Exchange Commission (SEC), claimed last week that nations with strong regulatory systems were becoming crypto centres.

In a blog post, the company said, "There is no doubt that UAE has the potential to be a strategic hub for Coinbase, amplifying our efforts across the world. It further serves as a particularly strategic bridge between Asia and Europe - two of our existing focus international regions to date."

"The vacuum created by other notable jurisdictions means that international counterparts, such as the UAE, are racing to fill the regulatory gap," added the crypto exchange.

Armstrong has been outspoken about the murkiness of existing US crypto law and even hinted about leaving the country.

But the CEO assured investors that Coinbase has no plans to exit the United States, its largest market.

Coinbase says that nations with strong regulatory systems were becoming crypto centres.

Previously, the crypto exchange had said, "We would like to see the US take a similar approach instead of regulation by enforcement, which has led to a disappointing trend for crypto development in the US."

Armstrong claims that UAE authorities are already ahead of the US regarding regulation.

Coinbase has been struggling through a bear market and strict regulations in the United States.

Coinbase Global announced that it had formally responded to a legal threat from the US Securities watchdog by asserting that it had not violated any securities laws.

CEO Armstrong and chief legal officer Paul Grewal responded to the SEC publicly, saying that the crypto exchange would like to sell securities in the future but does not feel comfortable doing so due to regulatory uncertainties.

After laying off 20% of its workforce in January, the company received a notification in March from the US SEC threatening to sue it over various business lines, adding further uncertainty to an already precarious situation.

In response to the recent wave of cryptocurrency investigations in the United States, several corporations have begun exploring alternative financial centres in other countries.

With a Bermuda licence, Coinbase has created a global derivatives exchange.

Good News After Smaller Loss?

Last week, the crypto exchange reported a smaller loss than expected in the first quarter thanks to cost savings and a broader revenue base.

In addition to launching wallet-as-a-service and other products to grow blockchain, the firm has profited from its transaction for One River Digital Asset Management to increase product offerings in subscription and service income.

After a dramatic selloff last year, investors are cautiously returning to the speculative asset class as a hedge against rising market risks.

Coinbase reported a loss of 34 cents per share, while experts expected a loss of $1.35 per share.

Even if the bitcoin market is experiencing a trend towards consolidation, trade volumes have more than halved to US$145 million, and retail trading volumes, which were crucial in making Coinbase a household brand in 2021, have dropped 72%.

The firm said earlier this year that it will be laying off a further 950 workers, marking the third round of layoffs.

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