Gemini, a popular cryptocurrency exchange, is reportedly preparing to launch perpetual futures offering for its international customers. This move is in line with the trend among various exchanges.
Many of them have been shifting their focus toward offering derivative products since the collapse of FTX. While derivatives trading offers a lucrative opportunity for exchanges, it also comes with regulatory challenges, especially in the United States.
Currently, the US financial watchdogs are investigating Binance’s derivatives offerings.
A New Product Offering
Gemini intends to introduce a new platform allowing customers to trade perpetual futures contracts. Perpetual futures contracts are derivative products allowing traders to bet on an asset’s future value without owning it.
These contracts can be extremely dangerous because of leverage, which can magnify earnings and losses. It is vital to remember that retail traders in the United States are not currently permitted to trade perpetual futures.
Apart from Gemini, other exchanges plan to introduce their product offerings for non-US users. One of the biggest cryptocurrency exchanges in the US, Coinbase, is one such crypto company.
Coinbase has been actively exploring opportunities to expand its offerings to users in other countries. Recent reports suggest that Coinbase plans to establish a new trading platform overseas.
In addition to its efforts to expand internationally, Coinbase has also been taking steps to protect itself from legal disputes. The exchange recently asked the Supreme Court to intervene in a legal dispute with the Internal Revenue Service (IRS) over the reporting of cryptocurrency transactions.
The heightened regulatory attention on crypto exchanges is a consequence of the FTX collapse, which has significantly impacted the broader crypto market. As a result, numerous prominent exchanges have come under the authorities’ radar.
Hence, there could be an increase in regulatory crackdowns on crypto exchanges in 2023.
Gemini Is Under Investigation Over Its Bitcoin Futures Contracts Offering
The CFTC is looking into Gemini’s Bitcoin futures product offering and has launched an action to search laptops for relevant data. Former executives provided the computers for a criminal investigation, while the Manhattan US Attorney’s Office issued a subpoena for their evidence.
The CFTC subsequently asked for the laptops for use in its civil case. Due to tighter regulation of the cryptocurrency industry by US authorities, exchanges may need to reevaluate their methods.
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