Is Coinbase Moving Out of the US? The SEC Comes Knocking

After Coinbase’s CEO, Brian Armstrong, made the company public two years ago , he mentioned the possibility of exiting the country. The reason being, unclear crypto regulations that could negatively affect the company’s brand and reputation.

Is Coinbase Moving Out of the US? The SEC Comes Knocking

As such, talks about potential investments outside the country are currently in the works.

But what’s the real score between Coinbase and the U.S., and where could the company potentially move to? This article will tell you everything you need to know.

The Force That Drove Armstrong’s Decision

During an event in London, Brian Armstrong couldn’t hide his frustration regarding unclear regulations in the U.S. He mentioned the differences in views of several regulators, especially on the classification and organization of digital assets.

This led Coinbase, the largest crypto exchange in the U.S., to set up Coinbase International Exchange, a new program that enables trading crypto derivatives by professional investors outside the U.S. This includes Ethereum and Bitcoin.

According to Armstrong, he’d prefer Coinbase to operate in a country where regulations have a more consistent approach. Take the United Kingdom, for example.

The CEO of Coinbase knows how important the crypto market is in the U.S. But he needs to see concrete improvements in the regulations, or else he sees potential company relocation, if necessary.

Currently, more than 50 crypto enforcement actions are initiated by the Securities and Exchange Commission, one for Bittrex, Coinbase’s rival company. The same goes for Coinbase. Armstrong also received a Well notice as a warning of legal action.

Moreover, Armstrong talked about the lack of distinction between the crypto industry’s different bodies. He mentioned that crypto exchanges like Coinbase should have the same regulations as other financial services companies. And the industry’s decentralized areas must be regulated differently due to the lack of a central authoritarian rule.

Other Exchanges Are Affected Too

Coinbase isn’t the only company affected. Bittrex, a Seattle exchange, also announced the possibility of leaving the U.S. before the company received a lawsuit from the SEC. Kraken, another exchange, is also unhappy with the confusing regulations. The company formally ceased its services for American customers last February because of a settlement with SEC.

Where Coinbase Considers Moving

According to Owen Lau, the executive director at Oppenheimer and Co., Europe can provide a better home for the company because of the uncertain and unfair regulatory environment in the U.S. As mentioned, Armstrong sees the U.K. as a possible relocation site because of better and more stable regulations.

In the United Kingdom, the FCA or the Financial Conduct Authority is the central regulator. This entity is responsible for securities and commodities of financial services and the crypto industry. Whereas in the U.S., separate bodies exist for each: the SEC and the CFTC or the Commodity Futures Trading Commission.

Brian Armstrong even stated that crypto companies don’t need to experience a raging battle between the SEC and the CFTC in the U.K. In the U.S., both entities issue contradictory statements every few weeks. This makes it difficult for crypto businesses to operate.

The United Kingdom is currently the second-largest market of Coinbase. Armstrong sees this as an opportunity to consider relocating should the circumstances and regulatory environment in the U.S. not improve over the next few years.

Coinbase Testing International Waters

As already established, Armstrong recently launched Coinbase International Exchange to help ease the problems. This program aims to expand its reach by enabling more professional investors outside of the U.S. to trade through API, if they’re within eligible jurisdictions.

Other considerations include:

  • Contracts that will allow five times the leverage
  • Trading should be settled through USDC Circle’s stablecoin
  • Coinbase provided a list of institutional investors

Coinbase continues to make international expansion one of its top priorities. Armstrong started expanding its offerings in Singapore and Brazil alongside Bermuda, where Coinbase finally received its operating license.

Armstrong personally chose Bermuda because it’s a highly respected country and features essential factors for an experienced financial regulator. Moreover, Bermuda is led by a respectable and world-class board of directors and executive team.

Coinbase has also started working with Abu Dhabi Global Market as a regulator that can help further the company’s expansion in the UAE.

Other International Programs of Coinbase

Aside from the Coinbase International Exchange, the company also launched “Go Broad, Go Deep,” another global initiative to further expand Coinbase’s reputation in prominent financial markets. The initiative aims to develop in Canada, the United Kingdom, Brazil, Dubai, and Singapore.

The “Go Broad, Go Deep” campaign aims to function over a period of two months, where Coinbase chose six different continents Armstrong sees as potential locations for building crypto hubs.

“The History of Money Initiative” is another international campaign that will serve as an educational program. It aims to facilitate the charting of the currency’s evolution. Scheduled to launch on July 19, “Stand with Crypto Day” gathers crypto-enthusiasts in Washington, D.C. to promote crypto-friendly policies.

A collaboration with the Financial Times, “The State of Crypto Summit,” has also been organized. It will be held on June 22 in New York City, featuring influential stakeholders from financial sectors. The event will serve as a focus group discussion on the innovative roles of financial technology in the crypto industry.

What Coinbase Holds Beyond Crypto

Beyond crypto, Brian Armstrong also advocates establishing a decentralized identity for blockchain technology. According to the CEO, it’s a way for individuals to achieve their identity and information because they’re deserving data owners.

The release of Ethereum layer 2 and Base network served as a signal of Coinbase’s goals beyond digital assets. This crypto company wants to further develop and expand other purposes of the blockchain technology.

More Jobs With The Regulations

The best thing to come out of this uncertainty is more job opportunities, especially in government agencies, private equity, hedge funds, mutual funds, and other financial firms. These sectors will need more regulatory personnel, especially in the security industry, to ensure that companies comply to prevent violations.

More regulatory personnel also means better relationships with the SEC, the Federal Reserve Bank, the Commodity Futures Trading Commission, and the Financial Industry Regulatory Authority. That’s if your company has available resources to hire more employees.

A Move on the Horizon

For Armstrong to consider relocating Coinbase highlights the importance of giving cryptocurrency the relevance and recognition it deserves on the global financial scene.

Coinbase isn’t giving up on its U.S. investors and financial markets. However, regulations must be improved immediately if the country doesn’t want to lose Coinbase to the United Kingdom. The uncertainty of the crypto scene in the U.S. may drive more financial exchange companies to think of relocating.

Are you a crypto investor at Coinbase? What’s your take regarding the possibility of the company relocating? Let us know in the comments section below.

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