Coinbase gains key license to offer derivatives in Europe through acquisition of Bux's Cyprus unit

Crypto exchange Coinbase has acquired a key license in pursuit of its plans for European expansion through an acquisition of the Cyprus unit of European brokerage company Bux. 

The acquisition was completed in August, according to an updated blog post from the company, which claims the company secured a Markets in Financial Instruments Directive II (MiFID II) license through the purchase. The acquisition was first flagged in a report from Finance Magnates,  which also noted Coinbase changed the entity's name to Coinbase Financial Services Europe in October. 

"Adding such a license to our international portfolio would further support the strong interest we’ve seen in our derivatives offerings and help us capture more of the ~75% of the global crypto market claimed by derivatives," the post states. 

The MiFID II regulation originally came into force in January 2018, and although Coinbase's newly-acquired license is based in Cyprus, it can be "passported" to other EU member states in a streamlined process, allowing Coinbase to offer its services across Europe without getting re-licensed in each separate jurisdiction. Bux had used the license to offer contracts for differences (CFD) trading products. 

"We have a long road ahead before finalizing the acquisition and operationalizing the EU MiFID licensed entity," Coinbase's blog post warned when it was originally published in January, though its August update claims the license could be operationalized "later this year [2024]," meaning a full launch may come early in 2025.

The value of the deal was not reported. Bux was previously acquired by Dutch bank ABN AMRO in a deal announced in December 2023 and closed in July 2024. Bux also sold off its UK subsidiary to UAE-based investment firm APM Capital last July as part of its plan to divest all regulated subsidiaries of Bux Holding, according to its CEO.