Publicly-traded cryptocurrency exchange Coinbase has become the first to receive approval from United States regulators to offer crypto futures products to investors within the country. The latest approval trails a two-year-long delay Coinbase faced after submitting a request to offer the financial service.
The National Futures Association, a CFTC designated SRO, has approved Coinbase Financial Markets. as a registered Futures Commission Merchant .
Coinbase can now offer futures contracts in BTC and ETH to eligible customers in the US.????
— Coinbase ????️ (@coinbase) August 16, 2023
Coinbase Can Now Offer Crypto Futures in U.S.
In September 2021, Coinbase applied to the National Futures Association (NFA) to operate a Futures Commission Merchant (FCM) platform. Approval meant that the crypto exchange would offer regulated crypto futures services to U.S.-based clients.
Since then, the exchange has worked with regulators to ensure compliance with financial regulations. For example, Coinbase’s FCM business model was structured to meet the customer protection requirements outlined by Commodity Futures Trading Commission (CFTC). Note that NFA is a self-regulated organization with designation from the CFTC.
According to an official announcement dated August 16th, the American crypto exchange stated that NFA finally gave the green light for the trading of crypto futures like Bitcoin and Ether futures contracts via its CFTC-regulated derivatives subsidiary dubbed the Coinbase Derivatives Exchange.
Through Coinbase’s FCM platform, U.S.-based investors can buy and sell futures contracts, similar to market making. Coinbase will now offer both spot and futures trading to eligible investors.
A Significant Milestone for Coinbase
Coinbase added in its report that the milestone will boost its business. Emphasizing that the crypto derivatives market holds approximately 75% of crypto trading volume globally, approval of futures trading will enable investors to use derivatives to manage risk on their crypto holdings. The company stated in its announcement:
“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.”
Meanwhile, the company’s futures trading is yet to go live. The webpage reads:
“U.S. regulated futures trading is coming soon. Sign up to join the waitlist and get early access.”
Coinbase believes its milestone will contribute to a clear regulatory framework governing how crypto exchanges offer crypto-based products to investors in the U.S. This is much needed as Coinbase finds itself locking horns with the U.S. Securities and Exchange Commission (SEC).
