- Coinbase becomes the first crypto-native exchange to receive approval to roll out Bitcoin and Ethereum futures to eligible US customers, alongside spot trading.
- The National Futures Association granted Coinbase approval to operate as a Futures Commission Merchant.
- Coinbase’s Chief Legal Officer welcomed the decision while the SEC lawsuit is underway.
Coinbase, one of the largest cryptocurrency exchanges, said Wednesday that it has received regulatory approval to roll out crypto futures trading in the US, becoming the first crypto-native exchange to offer these services alongside crypto spot trading on its platform.
The approval, secured by the National Futures Association (NFA) – an entity overseen by the Commodity Futures Trading Commission (CFTC) – represents a key milestone for Coinbase in its path to offer regulated crypto trading to eligible US customers. It also comes at a time when the exchange faces a lawsuit from the US Securities & Exchange Commission (SEC).
Coinbase secures approval to offer Bitcoin, Ethereum futures
The exchange had filed an application with the NFA in September 2021 to register as a futures commission merchant, a license that allows investors to buy and sell futures on Coinbase.
In a statement, Coinbase said that the approval represents “a critical milestone” for the company, which will become “the first crypto-native leader to directly offer traditional spot crypto trading alongside regulated and leveraged crypto futures."
Coinbase recently made headlines for the lawsuit brought forward by US financial regulator, the SEC, against the exchange for allegedly operating as an unregistered securities exchange. The exchange’s Layer 2 chain BASE also suffered its second rugpull within days of launch. Find out more about it here.
Paul Grewal, Coinbase’s Chief Legal Officer, welcomed the approval and thanked the CFTC for providing regulatory clarity.
Grewal acknowledged that the exchange’s legal team is still working on making headway in the lawsuit brought against Coinbase by the US SEC.
This moment was years in the making. It's is a testament to Coinbase’s unwavering commitment to safeguard our customers. Put simply, at every juncture, Coinbase has invested the time and diligence required to align with regulators actually interested in ... regulating. 1/3 https://t.co/Fq5zhWKdfn— paulgrewal.eth (@iampaulgrewal) August 16, 2023
Why is future trading important?
In its official announcement, Coinbase notes that the global crypto derivatives market represents around 75% of the total crypto trading volume worldwide. In 2022, Coinbase acquired a CFTC-regulated futures exchange, FairX,known as the Coinbase Derivatives Exchange.
The derivatives exchange is open to third-party brokers, futures commission merchants and market makers. In 2023, Coinbase established a deep liquidity pool on this platform with $4.7 billion in Bitcoin and $2 billion in Ethereum futures.
The approval sets the pace for rollout of these services and products to eligible US customers and bring them alongside crypto spot trading on its exchange, Coinbase said.
Bitcoin, altcoins, stablecoins FAQs
What is Bitcoin?
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
What are altcoins?
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
What are stablecoins?
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
What is Bitcoin Dominance?
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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