Coinbase is set to enhance its derivatives offerings in the European Union, aiming to acquire a Cyprus-based entity with a Markets in Financial Instruments Directive 2014 (MiFID II) license. MiFID II, the EU's updated regulation for financial instruments, broadens its focus beyond stocks to include other assets like fixed income, derivatives, and currencies.

With a MiFID II license, Coinbase plans to introduce regulated derivatives such as futures and options in the EU, complementing its existing spot trading services in Bitcoin and other cryptocurrencies.

This strategic acquisition aligns with Coinbase's "Five-point Global Compliance Standard," which encompasses Anti-Money Laundering (AML), Know Your Customer (KYC), global sanctions enforcement, governance best practices, and continuous monitoring and reporting.

Derivatives, constituting 75% of the total crypto trading volumes, are key to Coinbase's expansion strategy. However, the company faces stiff competition from established players in the derivatives market, including Binance, Bybit, OKX, and Deribit.

Coinbase's global growth efforts are partly driven by regulatory challenges in its home market, the United States. The company is embroiled in a lawsuit with the U.S. SEC over alleged securities law violations.

In preparation for the impending Markets in Crypto-Assets Regulations (MiCA), Coinbase designated Ireland as its central EU regulatory hub in October 2023. The company is working towards obtaining a singular MiCA license by December 2024, coinciding with the full implementation of the EU rules.

Cointelegraph