Not one or two major U.S. crypto brands will launch offshore exchanges this week. Coinbase confirmed that institutional users will begin trading with its new Bermuda venture today, and this morning, Fortune Crypto's Leo Schwartz revealed that the Winkleves twins are opening a store in Singapore. This is big news for the world of cryptocurrencies, so it's worth evaluating what it means and what it doesn't.
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The start of offshore operations does not mean that Coinbase and Gemini, who have been in the cryptocurrency scene for ten years, are turning their backs on the US. Yes, the decision to open overseas was in part a response to regulatory hostility. climate at home, but neither company has taken any major steps to raise rates entirely. And why should they? Most of their clients are located here, and most of their income comes from the United States, which, at least for now, is the most important financial center in the world. Things should get even worse if companies like Coinbase leave the country entirely.
The overseas offices offer the opportunity for new revenue that Coinbase and Gemini desperately need. Their new platforms, which are largely off-limits to U.S. players, will allow firms to offer exotic derivative products such as bitcoin and ethereum perpetual futures, allowing customers to use their positions 100 times. The market for these things is huge and you need to make money. But the two American brands have yet to convince customers to leave Binance and other global competitors that have been around for years and consider themselves too good. As a result, even if Coinbase and Gemini manage to be created, there is no guarantee that someone will come.
One final observation is that the new offshore efforts are a far cry from what American companies originally intended to do: bring the promise of cryptocurrencies to the common people. Instead, new offshore operations are emerging for the benefit of hedge funds and cowboy traders whose idea of entertainment is to spend millions of dollars on scary derivatives. Well, stay away from it unless you're into numbers or bored. They will eat you alive.
Meanwhile, U.S. operations of Coinbase and, to a lesser extent, Gemini will continue to grow. It will be interesting to see if retail customers remain a top priority for companies using these services, or become a secondary one once the country's most popular cryptocurrency brands get rich overseas.
Jeff John Roberts
jeff.roberts@fortune.com
@JeffJohnRoberts
This story originally appeared on Fortune.com
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