Gemini Launches Offshore Derivatives Platform

Gemini, the US-based cryptocurrency exchange, has announced the launch of a derivatives platform outside the United States. The new platform, called Gemini Foundation, will provide services to customers based in over 30 countries, including Singapore, Hong Kong, India, Argentina, Bahamas, Bermuda, and the British Virgin Islands, among others. This move is seen as a response to the tightening regulatory environment for crypto firms in the United States.

Gemini Foundation’s first derivatives contract will be a Bitcoin perpetual contract denominated in Gemini Dollar (GUSD). This will be followed by an ETH/GUSD perpetual contract shortly after. Eligible customers will be able to trade both spot and derivatives products and convert US dollars and USD Coin into GUSD on a 1:1 basis. Fees, profits, and losses will also be processed in GUSD. The default leverage on the platform is 20x, with the maximum leverage being 100x.

Perpetual futures trading is not regulated by the Commodity Futures Trading Commission, and exchanges offering crypto futures contracts, like BitMEX, are not available for US customers. Gemini Foundation will not offer services for customers in the United States.

The launch of the offshore derivatives platform comes just a few days after Gemini revealed plans to establish a new engineering hub in India. Gemini’s founders, Tyler and Cameron Winklevoss, have stated that the exchange has “big plans for international growth this year in APAC.” Earlier this month, Gemini filed a pre-registration with the Ontario Securities Commission to become a restricted dealer in Canada.

Gemini has been scrutinized by US authorities, with the New York State Department of Financial Services reportedly investigating the exchange over claims that many users had believed assets in their Earn accounts were protected by the Federal Deposit Insurance Corporation. Gemini’s Earn program halted withdrawals in November after its operating partner, Genesis, cited “unprecedented market turmoil.” In January, the firm filed for Chapter 11 bankruptcy. Reports at the time suggested that up to $900 million in Earn user funds could have been locked. The US Securities and Exchange Commission also charged the exchange with offering unregistered securities through Earn in January.

In light of these controversies, Gemini’s move to launch an offshore derivatives platform seems to be a strategic attempt to expand its business and distance itself from the regulatory scrutiny in the United States. The launch of Gemini Foundation is a significant step for the company, which has been expanding its services and geographical reach in recent years. With the new platform, Gemini is positioning itself as a player in the global derivatives market, targeting customers in countries where regulatory frameworks are more favorable.