• Gemini crypto exchange is launching an international crypto derivatives exchange to fill the gap left by FTX.
• The platform will offer risky perpetual futures, which are banned for retail trading in the US.
• The SEC and other regulatory bodies are toughening up on crypto firms offering derivatives services.
Gemini To Launch International Crypto Derivatives Exchange
The Gemini crypto exchange is working on launching an international crypto derivatives exchange to fill the hole left in the derivatives market by the FTX ecosystem collapse. Specifically, it will be offering a highly risky product – perpetual futures – that does not have an expiry date and can be traded with significant leverage. This product is currently banned for retail trading in the United States.
SEC Reaction
It remains to be seen how the operation pans out, as the company has already been in hot water with the U.S. Securities and Exchange Commission (SEC) for allegedly selling unregistered securities. The SEC may not be too thrilled about this new venture due to its record of non-compliance, even if it falls outside their jurisdiction. In January 2023, Gemini had to lay off 10% of its workforce after being caught up in the Genesis bankruptcy fiasco.
Regulatory Trouble For Derivatives Providers
Other regulatory bodies around the world are also getting stricter with crypto firms providing derivative services such as Binance Australia who had to shut down accounts of some wholesale investors who did not meet their criteria since they do not allow retail investors to participate in crypto derivatives trading on its platform.
Gemini’s Bid For Overseas Market Share
With FTX gone and Binance facing legal troubles there is a large market share open for grabs from overseas derivatives trading that Coinbase was interested in entering but may be blocked due to potential enforcement action from the SEC indicated by a Wells notice sent out earlier this year. This leaves Gemini at pole position for capturing this market share first through its international derivatives offering before Coinbase can get into gear with their plans for overseas products launch.
Co-Founders‘ Strategy
Cameron Winklevoss, co-founder at Gemini, has stated that they are looking forward to providing overseas traders with a secure platform powered by advanced technology so they can conduct business safely while benefiting from low transaction fees and high liquidity levels offered by Gemini’s services