Coinbase Plans to Break Crypto Industry Status Quo with Offshore Platform for Crypto Swaps

03/18/2023 19:12 • AI & Tech Insights • 68 views

According to reports, two sources said that Coinbase, the cryptocurrency exchange, is exploring the launch of an offshore platform to launch permanent swaps related to cryptocurrencies, as the company hopes to break the status quo of the industry dominated by its competitor, Coinbase. According to people familiar with the matter, Coinbase has briefed market makers and trading companies on plans to launch the platform in offshore jurisdictions, where permanent swap contracts will be included. Derivatives provide traders with a more capital efficient way to bet on the underlying cryptocurrency market.

Source: The proposed overseas platform of Coinbase will provide derivatives trading

Analysis based on this information:

Coinbase, the leading cryptocurrency exchange in the U.S., is reportedly exploring the launch of an offshore platform to offer permanent swaps related to cryptocurrencies. The move is aimed at breaking the industry status quo that has been dominated by its rival exchanges. According to two anonymous sources, the company has briefed market makers and trading firms on its plans to launch the platform in offshore jurisdictions.

Permanent swaps, also known as perpetual swaps, are derivative contracts that allow traders to bet on the price of cryptocurrencies without having to own the underlying assets. They offer a more capital-efficient way to speculate on the volatility of the crypto market, as they require less margin compared to trading spot or futures contracts. In a permanent swap, the price of the contract is equal to the price of the underlying asset, and it remains open indefinitely, unlike futures contracts.

The move by Coinbase to launch an offshore platform for crypto swaps signals its ambition to expand its product offerings and compete with other exchanges that already offer such products. By offering permanent swaps, Coinbase can attract more professional traders who are looking for a more flexible and cost-effective way to trade cryptocurrencies.

However, launching an offshore platform also poses some regulatory and legal challenges, as it would require Coinbase to comply with the laws and regulations of the jurisdictions where it operates. It could also raise concerns about market manipulation and transparency, as permanent swaps are not subject to the same reporting requirements as spot or futures trading.

Nevertheless, Coinbase’s move is a sign of the increasing maturity of the cryptocurrency market, as more players enter the space and offer innovative products and services. It remains to be seen whether Coinbase’s offshore platform for crypto swaps will be a game-changer in the industry, but it is clear that the company is determined to challenge the status quo and stay at the forefront of the rapidly-evolving crypto market.

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