Coinbase Receives Approval for Crypto Futures in the US


Following
regulatory issues in the US and a lawsuit in June which suggested illegal activities
within the country, the clouds over Coinbase seem to be clearing. Today
(Wednesday), the platform announced that it has been granted regulatory approval
from the National Futures Association (NFA) to introduce crypto futures to its
US institutional customers.

The
cryptocurrency exchange, Coinbase has repeatedly emphasized the importance of crypto
market regulations. In September 2021, it applied for Futures
Commission Merchant (FCM) authorization with the NFA. Although the process of establishing
a business model that aligns with the Commodity Futures Trading Commission’s (CFTC ) requirements was intricate and prolonged, the platform finally received
permission to offer regulated cryptocurrency instruments for eligible customers
in the United States.

“Since
our application in 2021, our team has engaged closely with regulators, ensuring
our business model aligns with CFTC’s customer protection standards,” said
Greg Tusar, the Vice President of Institutional Products at Coinbase Financial
Markets, Inc., in today’s blog post.

Tusar
added that Coinbase aims to build the most trusted and secure products
and services in the cryptocurrency space.

This move
will undoubtedly help Coinbase reclaim some of its lost share in the US
cryptocurrency market. Both Coinbase and Binance have experienced significant losses after
the June SEC lawsuits, with the latter’s market share in the local market
falling below 1%.

Huge Market, Huge Potential

According
to Coinbase, the global crypto derivatives market is enormous, accounting for
approximately 75% of global crypto trading volume. It allows traders to use
margins, allowing for more flexible investments than traditional spot trading.
However, this does not change the fact that, according to the latest data,
there has also been a decline in derivatives market volumes to this year’s lows.

Coinbase’s
acquisition of FairX in 2022, now rebranded as the Coinbase Derivatives
Exchange, was a strategic decision to leverage the benefits of derivatives
trading. The exchange has since seen significant growth, with a notable
liquidity pool featuring $4.7 billion BTC and $2.0 billion ETH futures traded
this year.

“In
the coming months, we’ll provide additional information on how our verified US
customers can access our futures offering,” Tusar concluded.

Exchanges
moving towards derivatives markets come at a time when US regulators are taking
a closer look at digital assets, classifying them as securities. In April, the
Winklevoss twins’ exchange, Gemini, established its own crypto derivatives
platform outside of the US.

Following
regulatory issues in the US and a lawsuit in June which suggested illegal activities
within the country, the clouds over Coinbase seem to be clearing. Today
(Wednesday), the platform announced that it has been granted regulatory approval
from the National Futures Association (NFA) to introduce crypto futures to its
US institutional customers.

The
cryptocurrency exchange, Coinbase has repeatedly emphasized the importance of crypto
market regulations. In September 2021, it applied for Futures
Commission Merchant (FCM) authorization with the NFA. Although the process of establishing
a business model that aligns with the Commodity Futures Trading Commission’s (CFTC ) requirements was intricate and prolonged, the platform finally received
permission to offer regulated cryptocurrency instruments for eligible customers
in the United States.

“Since
our application in 2021, our team has engaged closely with regulators, ensuring
our business model aligns with CFTC’s customer protection standards,” said
Greg Tusar, the Vice President of Institutional Products at Coinbase Financial
Markets, Inc., in today’s blog post.

Tusar
added that Coinbase aims to build the most trusted and secure products
and services in the cryptocurrency space.

This move
will undoubtedly help Coinbase reclaim some of its lost share in the US
cryptocurrency market. Both Coinbase and Binance have experienced significant losses after
the June SEC lawsuits, with the latter’s market share in the local market
falling below 1%.

Huge Market, Huge Potential

According
to Coinbase, the global crypto derivatives market is enormous, accounting for
approximately 75% of global crypto trading volume. It allows traders to use
margins, allowing for more flexible investments than traditional spot trading.
However, this does not change the fact that, according to the latest data,
there has also been a decline in derivatives market volumes to this year’s lows.

Coinbase’s
acquisition of FairX in 2022, now rebranded as the Coinbase Derivatives
Exchange, was a strategic decision to leverage the benefits of derivatives
trading. The exchange has since seen significant growth, with a notable
liquidity pool featuring $4.7 billion BTC and $2.0 billion ETH futures traded
this year.

“In
the coming months, we’ll provide additional information on how our verified US
customers can access our futures offering,” Tusar concluded.

Exchanges
moving towards derivatives markets come at a time when US regulators are taking
a closer look at digital assets, classifying them as securities. In April, the
Winklevoss twins’ exchange, Gemini, established its own crypto derivatives
platform outside of the US.





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