Coinbase (COIN) has stated that its U.S.-based exchange will now let people trade cryptocurrency futures. This change is made possible by Coinbase Financial Markets, which gives users of the site access to futures trading. After applying to be a Futures Commission Merchant with the National Futures Association (NFA) in September 2021, Coinbase has been given the go-ahead to let its customers trade crypto futures in a way that is controlled by the federal government.
This makes Coinbase the first platform for trading cryptocurrencies to offer these goods in a fully regulated way.
The Chicago Mercantile Exchange (CME) already offers bitcoin futures, and in June, the Chicago Board Options Exchange (CBOE) gave CBOE Digital, a division of CBOE, permission to start leveraged bitcoin and ether futures.
This isn’t the first time CBOE has done something with crypto futures. In 2017, the exchange was the first to offer bitcoin futures, which led to a lot of trade. But after about two years, CBOE stopped making the product because there wasn’t enough desire for it.
Coinbase just said that futures trading make up about 75% of all cryptocurrency trade around the world. Because of this, the approval from the National Futures Association (NFA) is a very important turning point. Coinbase thinks that this is a “watershed moment.”
During the first few minutes of trading on Wednesday, shares of Coinbase went up by about 1%. This was because people thought that this new government approval could give the cryptocurrency exchange more ways to make money. But around noon, they went down and were about 1% lower than when they started.
Before, institutional clients of Coinbase were already able to trade cryptocurrency futures on the site. Still, now that regulators have given the go-ahead, all qualified Coinbase customers in the U.S. will be able to trade in futures.
It’s important to note that Coinbase’s approval to trade futures comes in the middle of a court battle with the SEC. This year, the SEC has looked into a number of crypto companies, including Binance and Coinbase, because of claims that they sold unregistered stocks. Brian Armstrong, the CEO of Coinbase, expressed his belief that the regulatory approach to crypto in the U.S. might compel the business to relocate to markets beyond the U.S.
