Coinbase CEO Brian Armstrong says unclear U.S. rules pushed crypto perps trading offshore, where Americans often used VPNs and weak KYC to access the product.
Americans may have driven about half of all crypto perpetual futures volume through offshore platforms, VPNs and loose KYC controls before regulators allowed a compliant U.S. route.
In a June 10 post on X, Coinbase CEO Brian Armstrong said the ambiguous regulations in the U.S. pushed crypto perps trading offshore for years preventing Americans from participating in trading activities, and although many still accessed crypto perps by using offshore exchanges. Armstrong wrote:
“If we’re being honest, probably ~half of all perpetual futures volume was Americans using offshore products via VPN with loose KYC controls (an open secret in the industry).”
He added that penalties were “rarely, if ever, enforced,” which he said was frustrating for Coinbase, a publicly traded U.S. company trying to follow domestic rules while offshore rivals kept serving American traders.
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Armstrong Says Perps Ban Sent Traders Offshore
The comments came after the Commodity Futures Trading Commission (CFTC) allowed Coinbase to connect U.S. clients to certain derivatives listed on Deribit, the crypto options exchange Coinbase acquired for about $2.9 billion.
The CFTC said on May 29 that its staff confirmed some crypto perpetual contracts can be categorized as foreign futures.
Coinbase said the decision made it the first U.S.-regulated futures commission merchant to connect U.S. clients to global crypto options and perpetual futures liquidity.
Traditional Exchanges Push Back
But the decision has already drawn criticism from some traditional heavyweight derivatives markets.
For instance, CME Group CEO Terry Duffy warned that newly approved crypto perps could create systemic risks, saying he has “grave concerns” about how the contracts are structured, calling them “a disaster waiting to happen.”
But as Armstrong argues, U.S. traders can now use the products “in a compliant way with a US company,” instead of relying on offshore platforms.
Read more: Polymarket Perps Push Prediction Markets Deeper Into Crypto Trading
