Coinbase has officially acquired the Cyprus-based unit of BUX, a European trading platform. The entity, formerly known as BUX Europe Limited, has been renamed Coinbase Financial Services Europe Ltd.
This strategic move secures Coinbase a coveted Cyprus Investment Firm (CIF) license. And this enables it to offer contracts for differences (CFDs) and other financial products across the European Economic Area (EEA).
Coinbase’s Strategic Entry into the European CFD Market
The acquisition will help Coinbase to penetrate the highly competitive CFD market. The CIF license allows the crypto exchange to provide highly complex financial derivatives that are especially popular among the professional and institutional investors.
Moreover, the license allows Coinbase to transfer its regulatory compliance to all the EEA countries. This would make it possible to expand its business in Europe even further.
However, the Cyprus Securities and Exchange Commission (CySEC) has recently granted its nod to Coinbase’s new platform even as the service remains inactive.
Analysts believe that Coinbase is targeting professional and institutional investors more than the retail traders.
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This is in line with a recent tendency of crypto exchanges to expand their portfolios in order to attract more advanced investors.
Details of the BUX Acquisition
The deal closed in October 2024, and it points to Coinbase’s desire to establish a presence in Europe’s licensed markets.
BUX, which is based in the Netherlands, had first moved its Cyprus-based clients over to AvaTrade, a CFD broker, before establishing the sale to Coinbase.
BUX’s CEO Yorick Naeff said that the deal is in line with the company’s strategic direction and focus on shares and ETFs, which were acquired by ABN AMRO BANK last year.
”We are pleased with the sale of our MiFID licensed entity, BUX Europe Limited (BEU) to Coinbase, a globally recognized leader in the crypto industry.” Naeff said.
This is a significant deal for Coinbase. It seems to be more interested in BUX’s operational capabilities and compliance permissions than in its user base.
Holding the MiFID license, Coinbase is ready to expand and offer contracts for difference (CFDs) among the other financial instruments.
Crypto Exchanges are Entering the CFD Market
Coinbase’s acquisition of BUX’s Cyprus-based unit comes on the heels of other cryptocurrency exchanges venturing into the traditional financial market.
CFDs are derivatives which enable market participants to trade on the price fluctuations of an asset without owning the asset and have been popular among professional traders for some time.
Importantly, Coinbase is not the only crypto exchange interested in the CFDs. Crypto.com recently bought Fintek Securities, which is an Australian regulated CFD broker.
Bybit is operating under the license of Mauritius for offering forex and CFD. Binance has also recently been able to obtain approval from the Central Bank of Brazil to purchase a locally licensed broker-dealer.
This is the third time this year and the 21st global regulatory authorization for Binance cementing its position as the most licensed cryptocurrency exchange in the world.
This growing interest in regulated financial products shows that crypto exchanges are expanding their services to meet the competition.
Implications for the European Market
This comes after Coinbase secured a new CIF license that will see the company increase its services to institutional investors across Europe.
This comes in the light of increasing demand for regulated financial products in the cryptocurrencies market.
To this end, Coinbase is well-positioned to offer institutional investors a one-stop solution for accessing digital assets and other financial instruments thanks to the new infrastructure it has recently purchased.
The deal comes as BUX has also been implementing a divestment strategy as part of its business approach. BUX had previously sold its UK CFD business to APM Capital, a UAE based organization.
Yorick Naeff pointed out that BUX is now about shares and ETFs and said, “We wish Coinbase continued success as they expand their presence in the European market.”
