Gemini, a U.S.-based cryptocurrency exchange, has announced its plans to launch a derivatives platform outside of the country. The new division, called Gemini Foundation, will offer a perpetual bitcoin (BTC) contract denominated in Gemini dollars (GUSD) as its first product. This will be followed by an ether (ETH) perpetual contract also linked to GUSD. Unlike traditional derivatives, perpetuals do not have an expiration date.
This announcement comes at a time of increased scrutiny by U.S. regulators and lawmakers regarding the role of cryptocurrencies in the world’s largest economy. Gemini has been affected by this campaign, as the company and Genesis (which is owned by Digital Currency Group, like CoinDesk) were accused by the Securities and Exchange Commission (SEC) of selling unregistered securities in January.
It is important to note that being based outside of the U.S. does not mean that Gemini Foundation will be out of reach of U.S. watchdogs. This is evident from the lawsuit filed by the Commodity Futures Trading Commission (CFTC) against Binance, the largest cryptocurrency exchange, in March, despite being based elsewhere (although the company has been secretive about its location). Additionally, former CEO of FTX, Sam Bankman-Fried, faces U.S. criminal charges despite the company being based in the Bahamas.
Gemini’s move to launch a derivatives platform outside of the U.S. may be a strategic decision to avoid further regulatory issues in the country. By operating outside of the U.S., Gemini may be able to offer its services to a wider range of customers without the constraints of U.S. regulations. However, it remains to be seen how effective this strategy will be in the long run.
Gemini’s decision to launch perpetual contracts denominated in GUSD is interesting as it allows traders to avoid the volatility of other cryptocurrencies. GUSD is a stablecoin pegged to the U.S. dollar, which means that its value remains relatively stable. This makes it an attractive option for traders who want to hedge against the volatility of cryptocurrencies without having to convert their holdings into fiat currency.
Gemini’s move into the derivatives market is not surprising considering the growing demand for such products in the cryptocurrency space. Derivatives allow traders to speculate on the price movements of cryptocurrencies without having to own the underlying asset. This can be useful for traders who want to profit from price movements without having to deal with the complexities of owning and storing cryptocurrencies.
Gemini’s entry into the derivatives market may also be seen as a way to compete with other cryptocurrency exchanges that already offer such products. For example, BitMEX, a popular cryptocurrency exchange, offers perpetual contracts for bitcoin and other cryptocurrencies. By offering similar products, Gemini may be able to attract traders who are already familiar with such products.
In conclusion, Gemini’s decision to launch a derivatives platform outside of the U.S. is an interesting development in the cryptocurrency space. It remains to be seen how effective this strategy will be in the long run, but it does offer Gemini the opportunity to expand its services to a wider range of customers. Additionally, the launch of perpetual contracts denominated in GUSD is a unique offering that may attract traders who are looking for a stable option in the volatile world of cryptocurrencies.