Coinbase, a prominent cryptocurrency exchange, has recently received the green light from the National Futures Association (NFA) to extend its services to include investment opportunities in cryptocurrency futures for eligible clients within the United States.
On August 16, Coinbase proudly announced that it had been granted official authorization to function as a Futures Commission Merchant (FCM) platform.
This significant approval empowers Coinbase to take on the role of introducing futures contracts for two major cryptocurrencies: Bitcoin (BTC) and Ether (ETH).
These offerings will be made available through Coinbase’s Commodity Futures Trading Commission (CFTC), a regulated derivatives exchange. They will also complement their spot market, ensuring a seamless experience under the oversight of the CFTC and NFA.
Coinbase aims to provide a secure entry point into the crypto industry by obtaining approval for US customers to engage with regulated crypto derivatives, thereby contributing to keeping the US at the forefront of digital innovation.
In its blog, Coinbase stated that regulatory adherence and transparency are vital for instilling confidence in individual customers and institutions.
The company emphasized the necessity of a CFTC-regulated crypto derivatives market to foster significant growth and broader participation in the crypto economy.
“Access to a CFTC-regulated crypto derivatives market is essential to unlocking significant growth and enabling broader participation in the crypto economy.”
Coinbase’s Emphasis on Crypto Derivatives Market and Regulatory Compliance in Path to Becoming a Publicly-Traded Company
In its blog post, Coinbase emphasized that the worldwide crypto derivatives market comprises 75% of the total crypto trading volume, asserting that “Margin trading empowers customers with leverage and entry into the crypto market, requiring less initial investment than traditional spot trading.”
Coinbase applied to the NFA in September 2021 to register as a Futures Commission Merchant (FCM).
Since then, they have collaborated with regulators to ensure full compliance with regulations and aligned their FCM’s business model with the CFTC’s customer protection mandates.
The decision to become a publicly-traded US company was driven by the belief that the US offers the most robust regulatory framework for consumer safeguarding while embracing the potential of the crypto industry.
“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 in the statement.
Coinbase’s cryptocurrency futures webpage states that the new futures trading service won’t be immediately accessible in the United States.
The company’s website announces, “US-regulated futures trading is coming soon. Enroll on the waitlist for early access.”
In the coming months, Coinbase plans to share more details on how verified US customers can access their futures offering.
However, Coinbase faces a legal battle with the US Securities and Exchange Commission (SEC). The SEC sued Coinbase in early June, claiming that the exchange breached local securities laws by selling unregistered securities.