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US Operators Struggle for Survival! Gemini Launches Derivatives Exchange with 100x Leverage, Coinbase Reaches Settlement with SEC

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US Operators Struggle for Survival! Gemini Launches Derivatives Exchange with 100x Leverage, Coinbase Reaches Settlement with SEC

"Fight or Flight," facing regulatory pressure, you have to choose one way. With increasing regulatory actions and stricter business restrictions in the United States, the Gemini exchange announced the launch of a derivatives exchange for non-U.S. residents on the 22nd. On the other hand, despite multiple warnings that the U.S. blockchain industry will fall behind, Coinbase also reached a settlement with the SEC today.

Gemini and Coinbase Under Regulatory Investigation, Actively Seeking Solutions

The long-established exchanges in the U.S., Coinbase and Gemini, have come under investigation following the bankruptcy of the exchange FTX.

This year, Gemini faced accusations from the SEC regarding its financial product Earn being an unregistered security, as well as being accused by the New York Department of Financial Services of misleading investors about having FDIC deposit insurance. Gemini is also dealing with financial disputes with the lending company Genesis under DCG, leading to financial losses and efforts to find investors to sustain operations.

On the other hand, Coinbase's staking and wallet services are deemed potentially involving securities by the SEC. After receiving a Wells notice indicating potential securities compliance issues, Coinbase has been publicly protesting against the SEC's enforcement actions over establishing regulatory frameworks. Coinbase has also been actively visiting the EU and UK, praising the EU's MiCA regulatory framework while cautioning that the U.S. may fall behind internationally. There are even rumors of plans to leave the U.S. and establish a derivatives exchange abroad.

Gemini Launches Offshore Derivatives Exchange: Gemini Foundation

Gemini has announced the launch of Gemini Foundation, a cryptocurrency derivatives platform primarily targeting non-U.S. residents. The first contract product will be a Bitcoin perpetual contract priced in Gemini dollars (GUSD).

Gemini Foundation will serve customers in the following regions:

Singapore, Hong Kong, India, Argentina, Bahamas, Bermuda, British Virgin Islands (BVI), Bhutan, Brazil, Cayman Islands, Chile, Egypt, El Salvador, Guernsey, Israel, Jersey, New Zealand, Nigeria, Panama, Peru, Philippines, Saint Lucia, Saint Vincent and the Grenadines, South Africa, South Korea, Switzerland, Thailand, Turkey, Uruguay, and Vietnam.

The default leverage is 20x, with a maximum of up to 100x.

Some in the community believe that even if Gemini takes the right steps, it may be too late given the current market competition.

Coinbase Reaches Agreement with SEC

Coinbase CEO Brian Armstrong met with the SEC today, stating that both parties are committed to clarifying cryptocurrency regulations in the U.S. to prevent the U.S. innovation industry from falling behind internationally and to avoid using enforcement actions in place of clear regulations. Armstrong mentioned that this issue will also require help from Congress.

However, in a recent lawsuit announcement against the exchange Bittrex, the SEC stated that the issue in the crypto market lies in the lack of regulatory compliance rather than regulatory clarity. It seems that there is still much to work out between businesses and the government.