Coinbase looks for American escape route

American crypto platforms and islands in the Caribbean look like a match made in heaven. After FTX went bankrupt last year, it was all hands on deck for the government of the Bahamas [to quickly extradite Sam Bankman-Fried, the CEO of a major employer for the islands](https://www.nytimes.com/2022/12/12/business/ftx-sam-bankman-fried-bahamas.html). And now the largest US crypto company, Coinbase, is thinking about moving to Bermuda. Mixed feelings both in the US and on Bermuda.

Election

With the countdown for the US presidential election of next year well underway, President Joe Biden’s administration is taking a much more populist stance than expected. Anything that any wavering conservative voter doesn’t understand or like is being tightly regulated. Climate change and all things “woke” seem to be moving into the background for the Democrats.

One of the industries the White House seems to have targeted for more restriction and regulation is crypto. If that happens, Coinbase may no longer be allowed to operate in the US.

To hedge against that risk, Brian Armstrong’s crypto company Coinbase arranged a license to operate from Bermuda. That news was not really welcomed in the US this week, and in Bermuda itself there was growing suspicion as well.

U.S. crypto exchange Coinbase secures Bermuda licence https://t.co/DvVk77l3uf pic.twitter.com/g5LXJELoJT

— Reuters (@Reuters) April 20, 2023

After all, authorities in Bermuda know all too well what happened to FTX last year. When that major crypto platform went bankrupt, the government in the Bahamas had to demonstrate to the US what they had done to impose FTX regulations whilst operating on their territory.

Not too much, as it turned out, because a billion-dollar company on the territory of an island group the size of a medium-sized city in the US is of course a very welcome employer.

In the winter months, when there are fewer tourists in the Bahamas, at least there were still the employees of FTX, who, thanks to the crypto bull market in 2020 and 2021, were able to spend tens of thousands of dollars per person per month.

2024

And now there will soon be Coinbase in Bermuda. The license is being interpreted as a possible escape route for Brian Armstrong to continue operating as a crypto platform if the Democratic government were to fully restrict crypto in the USA. After the banking debacle, it is therefore becoming increasingly difficult for American crypto companies to continue operating in the US, just as it has been the case in China for some time.

On the other hand there is Europe, which officially approved the MiCa rules last week.

2024 will be a very interesting year for crypto with a halving for Bitcoin, new rules in Europe and a new boss (possibly the same as the old boss) in the US White House.