A prominent cryptocurrency exchange has recently chosen Malta as its European hub and has attained in-principle approval for an Investment Firm license from the Malta Financial Services Authority (MFSA).
This license will enable the exchange to provide regulated options and futures trading, including contracts for difference (CFD) instruments, across the European Economic Area (EEA) in accordance with the Markets in Financial Instruments Directive (MiFID II). Notably, the exchange plans to introduce perpetual futures contracts — a type of futures agreement that does not have an expiration date — throughout the European bloc.
The acquisition of the MiFID II license represents a strategic part of the exchange’s broader efforts to expand its services within Europe, intended to broaden the range of offerings available to both institutional and retail clients. The growing interest in cryptocurrency derivatives, particularly from institutional investors, is noted, reflecting the maturation of crypto as a recognized asset class. The exchange aims to deliver an exceptional service for all types of investors, highlighting its commitment to enhancing the trading experience.
In addition to its efforts to obtain the MiFID II license, the exchange has also received a Virtual Financial Assets (VFA) Service License from Maltese regulatory authorities, solidifying its status as a central player in the Markets in Crypto-Assets (MiCA) framework. Furthermore, having a similar licensing arrangement in France aids its operational capabilities.
It’s important to differentiate that these existing crypto licenses do not cover the offering of derivatives. This is where the MiFID II license comes into play, facilitating entry into the regulated derivatives market for cryptocurrencies. Recently, other exchanges have pursued MiFID licenses to expand their offerings within the EEA. Notably, Coinbase acquired a Cypriot company to obtain its MiFID II license, which previously dealt in CFD trading. Similarly, Kraken attained a comparable license through the acquisition of another Cypriot firm, although the specific details of that firm were not disclosed.
The focus on providing crypto perpetual futures is evident among these exchanges, but there lies potential for further expansion into the CFD market in the future. Illustrating this adaptability, another cryptocurrency platform recently made strides by procuring a CFD brokerage in Australia, demonstrating that offering such derivative instruments is a feasible progression for crypto exchanges.
As the landscape of cryptocurrency trading continues to evolve, these developments signify a shift towards a more structured and regulated environment, attracting greater interest from institutional participants who are increasingly looking at crypto derivatives as viable investment options. The ongoing expansion by various exchanges throughout Europe shows a concerted effort to keep pace with regulatory requirements while responding to market demands.
Overall, the approval of the Investment Firm license marks an important milestone for the exchange in its European ambitions, allowing it to effectively navigate and capitalize on the growing segment of cryptocurrency financial products. This strategic move will likely broaden opportunities for engaging with a wider array of investors, ultimately enhancing the trading landscape within the region.