August 16, 2023 at 14:18 GMTModified date: August 16, 2023 at 14:18 GMT
August 16, 2023 at 14:18 GMT

Coinbase approved to offer BTC and ETH futures in US

Coinbase will provide US investors with BTC and ETH futures contracts after gaining approval from the NFA. The next steps are expected over the coming months.

Coinbase approved to offer BTC and ETH futures in US

The crypto exchange Coinbase has received the green light from the National Futures Association to roll out crypto futures in the US, after a process that spanned nearly two years. Eligible customers will be able to trade Bitcoin and Ethereum futures contracts. 

Coinbase made the announcement today, 16 August, revealing that it now has permission to operate a Futures Commission Merchant platform. 

“Access to a CFTC-regulated crypto derivatives market is essential to unlocking significant growth and enabling broader participation in the cryptoeconomy,” its press release said. 

Coinbase gains regulatory approval

This approval from US regulators gives Coinbase the opportunity to introduce Bitcoin and Ethereum futures. The new contracts will launch on its Commodity Futures Trading Commission-regulated derivatives exchange.

While it hasn’t launched to US customers just yet, the crypto futures contracts are expected “soon”. Investors are able to sign up to the waiting list for early access.

“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,” the press release added. 

Coinbase filed the initial application with the NFA back in September 2021. “Our team has worked with regulators since then to ensure we will comply with all the necessary regulations and that our FCM’s business model meets the CFTC’s customer protection requirements.” 

Broader implications

In its statement, Coinbase noted that the global derivatives market makes up 75% of crypto’s trading volume. 

“The ability to trade using margin gives customers leverage and access to the crypto market with less upfront investment than traditional spot trading.”

Coinbase users will be able to invest with long and short positions, increasing their exposure to the crypto market. 

Nano Bitcoin and Ethereum futures contracts were launched by Coinbase in 2022, which are open to brokers and market makers. So far in 2023, it has attracted large investments. A total of $4.7billion in Bitcoin and $2bn in Ethereum were traded this year.

“Obtaining FCM approval was our next step in bringing these transparent and secure markets to our customers so they can access regulated futures contracts alongside our liquid spot market,” Coinbase said.

Coinbase makes expansion plans

This approval comes as Coinbase has announced various plans to expand its operations. In early June, the exchange revealed it was launching Bitcoin and Ethereum futures trading for institutional investors. 

“Since the successful launch of our nano Bitcoin (BIT) and nano Ether (ET) contracts, we have seen institutional interest and the demand for advanced derivatives products,” Coinbase said. 

Coinbase has also recently launched a new derivatives exchange in Bermuda. The new platform is not available to US customers, but is open to institutional investors in other locations.

The move to exclude US investors follows the US Secuties and Exchange Commission’s lawsuit against Coinbase. It alleged that Coinbase operated as unregistered securities exchange. 

“Coinbase’s alleged failures deprive investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC,” said SEC Chair Gary Gensler.

Despite these charges, Coinbase is expected to announce how US customers can access futures trading over the coming months. 

Coinbase’s statement added: “Where regulations are clear and sensible, we will work with regulators to receive the authorizations needed to offer products.”