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Coinbase to enter crypto futures market

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Coinbase to enter crypto futures market

Coinbase, the first listed cryptocurrency exchange in the United States, announced it has applied to become a registered Futures Commission Merchant (FCM) with the National Futures Association (NFA).

Coinbase made this announcement on Twitter in the Asian session stating, “Today, Coinbase filed an application with the NFA to register as an FCM – Futures Commission Merchant. This is the next step to broaden our offerings and offer futures and derivatives trading on our platforms. Goal: Further grow the crypto economy.”

Details are unknown but according to the NFA website, the pending application was submitted yesterday under the name “Coinbase Global Inc.”

If Coinbase becomes a registered FCM member under the NFA, the firm will then need to register with the Commodity Futures Trading Commission (CFTC), the United States’ derivatives market regulator, to get the green light.

This comes after LedgerX announced their acquisition by FTX exchange. One could say FTX’s acquisition of LedgerX is strategic as the company is already regulated under the Commodity Futures Trading Commission (CFTC), Swap Execution Facility (SEF), and Derivatives Clearing Organization (DCO) which is expected to expand FTX’s offerings of its futures product, in the futures market.

These are all licenses that Coinbase will still have to pursue before it can fully offer its own version of the futures product to its clients. The crypto derivatives markets exceed the size of spot markets and despite an abundance of regulatory uncertainty, derivatives trading have exploded in popularity in 2021.

According to data from CoinGecko the market processed more than $45.9 billion over the past 24 hours.

What you should know

This also came after Coinbase boss Brian Armstrong shared on his Twitter page that the Securities and Exchange Commission (SEC) threatened to sue the company if it went through with offering a USD coin (USDC) lending product that promises 4% APY to its clients.

Coinbase will be hoping its move to futures and derivatives goes a lot smoother.

COIN is trading on the NASDAQ exchange for $247.07 per share as of the time of this writing.

Since its listing, COIN is down 27.76%.

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