"If You Can't Beat ‘Em, Buy ‘Em" - Coinbase

TL;DR

• Derivatives in cryptocurrency are the same as they are in traditional markets: A financial product that ‘derives’ its value from something, without actually being that thing.

• Players like Binance, OKX, Bybit, and Deribit have been leading the way for derivatives in the global trading market, and Coinbase wanted a piece...

• So, they acquired a MiFID II-licensed entity in Cyprus, allowing Coinbase to offer cryptocurrency-based derivatives in Europe and play in the global derivatives market.

Full Story

One of the first things they teach you in business school? When you're the boss, your job is to hire people who do things better than you.

At least, we assume that’s what they teach you (we wouldn’t know).

Point is: if you’re the CEO, and you need legal work done - you’re going to hire a lawyer.

And this is exactly what Coinbase is doing, but with derivatives.

Lettuce explain…

Derivatives in cryptocurrency are the same as they are in traditional markets:

A financial product that ‘derives’ its value from something, without actually being that thing.

E.g. A futures contract on Bitcoin is a ‘derivative,’ in that it’s a bet on the future price of Bitcoin, but isn’t Bitcoin itself.

Which is kind of like betting on a sports team...

It’s not like you actually own the sports team when you place a bet, you’re just predicting whether they’ll win or lose.

And in the Crypto world, 75% of all crypto trades are derivatives - which means there’s a bunch of money to be made in supporting derivative trades.

Players like Binance, OKX, Bybit, and Deribit have been leading the way for derivatives in the global trading market, and Coinbase wanted a piece...

So, here's where Coinbase’s new ‘hire’ comes in:

Coinbase has been vocal about pursuing global growth - and with a regulatory landscape ever changing in the EU, they would have had to have waited for a license to sell derivatives.

So instead, they 'hired out,' acquiring a MiFID II-licensed entity in Cyprus.

Allowing Coinbase to offer cryptocurrency-based derivatives in Europe and play in the global derivatives market.

The purchase will still need to be approved by regulators, but this option will help get them into the game without having to learn all the processes from scratch.

Smart!