Gemini’s Plan for Derivatives Exchange Adds to Crypto’s Flight From the US

Crypto businesses in the US are pursuing targeted international expansion amid a deepening regulatory crackdown at home.

(Bloomberg) — Crypto businesses in the US are pursuing targeted international expansion amid a deepening regulatory crackdown at home.

The latest moves came from billionaire twins Tyler and Cameron Winklevoss’ Gemini Trust Co. The exchange last week unveiled plans to target growth in Asia and to establish a non-US crypto derivatives platform.

The company’s announcements came not long after Coinbase Global Inc., the biggest US crypto exchange, said it had obtained a virtual-asset license in Bermuda. Some reports say Coinbase will set up a derivatives platform there.

Coinbase’s Chief Executive Officer Brian Armstrong recently said the exchange might consider moving its headquarters outside the US amid a clampdown on the industry in the world’s largest economy following the collapse of rival FTX.

The Securities and Exchange Commission has rattled the US digital-asset sector with a flurry of enforcement actions this year, while American politicians are struggling to develop crypto legislation. In contrast, the European Union is progressing an effort to create rules for the industry and places like Hong Kong and Dubai are seeking to foster crypto hubs. 

“Given the progress of regulators in the Asia Pacific and the Middle East toward clarifying their regimes, it seems likely that virtual-asset service providers will continue to gravitate toward jurisdictions that provide greater clarity and specific guidance,” said Vince Turcotte, director of digital-assets at market surveillance firm Eventus in Hong Kong.

Gemini last week named its Global Chief Technical Officer Pravjit Tiwana as Asia-Pacific chief executive. The company will set up an engineering hub in India and expand a team in Singapore.

Gemini’s planned derivatives exchange will be available across 30 territories, but not the US, according to a blog post. It will initially offer Bitcoin and Ether perpetual contracts denominated in Gemini dollars or GUSD, a stablecoin.

SEC Flurry

Coinbase said in an April 19 blog post that, aside from Bermuda, it’s accelerating plans for the United Arab Emirates amid discussions with Abu Dhabi officials over a potential license for a regulated exchange.

Gemini, Coinbase, Genesis Global Capital, Kraken and Bittrex Inc. are among the companies that have been the target of tightening SEC oversight. Bittrex is shutting down its US operations, citing the regulatory environment.

Meanwhile the Commodity Futures Trading Commission is suing Binance Holdings Ltd., the world’s largest crypto exchange, and its Chief Executive Officer Changpeng Zhao for breaking US derivatives rules. Binance has said it was disappointed by the suit and would continue to work with the regulator.

FTX’s giant bankruptcy and a litany of other wipeouts following last year’s crypto rout have stoked skepticism about digital assets in the US. The SEC’s Chair Gary Gensler argues most digital tokens are unregistered securities and that sector “has built up around non-compliance.”

(Updates from the first paragraph with context on crypto in the US.)

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