Coinbase has obtained regulatory approval to introduce federally regulated cryptocurrency futures trading to eligible customers in the United States. With the launch of these new futures offerings, America’s largest crypto platform aims to further expand its institutional services and provide additional investment options for its clientele.
The cryptocurrency exchange revealed that it has received the green light from the National Futures Association to operate as a futures commission merchant. Coinbase submitted its application to the association back in 2021.
This regulatory approval is pivotal, as it enables Coinbase to grant U.S.-based investors access to the cryptocurrency derivatives market, an area that was previously inaccessible to them. Crypto derivatives constitute over 75% of global crypto trades, but due to their intricate nature and high risk levels, they were largely off-limits for American investors. These financial tools allow traders to speculate on price movements without owning the actual underlying asset, such as a cryptocurrency like Bitcoin.
“We believe this is a watershed moment to be able to bring regulated crypto products to U.S. customers. This is a critical milestone that reaffirms our commitment to operate a regulated and compliant business and be the most trusted and secure crypto-native platform for our customers,” Coinbase said.
With this regulatory milestone, Coinbase will offer eligible U.S. customers the chance to engage with regulated derivatives products through Coinbase Financial Markets. This operation will be subject to the oversight of the Commodity Futures Trading Commission and the National Futures Association.
Coinbase announced that it will provide cryptocurrency futures contracts for Bitcoin and Ether. These futures are essentially agreements to purchase or sell an asset at a later date, at a pre-agreed price outlined in the contract.
“This is a significant milestone for bringing federal regulatory oversight over the crypto markets. Under the supervision of the CFTC and NFA, Coinbase will be able to offer regulated futures in a manner that protects consumers and helps ensure that the US remains a center for digital innovation,” said Faryar Shirzad, Coinbase’s chief policy officer.
Derivatives, in the context of finance, are contractual agreements that derive their value from an underlying asset. In the cryptocurrency space, the derivatives market involves traders purchasing contracts based on the projected future price movements of digital assets. With these futures contracts, traders can participate in the price fluctuations of Bitcoin and Ethereum, allowing them to potentially profit from their predictions about the future value of these cryptocurrencies.
Coinbase’s website presently features a message indicating that U.S.-regulated futures trading is coming soon and invites individuals to join its waitlist. The company had previously disclosed its intention to launch futures trading for institutional investors on its Coinbase Derivatives Exchange in June.
