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For individual customers and institutions, regulations and transparency are key and help build assurance. So, gaining access to a regulated cryptocurrency derivatives market is very important for bringing about notable developments and expanding the involvement of people in the cryptocurrency economy.
Roughly two years ago (September 2021), Coinbase Financial Market applied to the NFA to be registered as an FCM. A Coinbase team has since then been collaborating with regulators to see to it that the company complies with required guidelines and that the company’s FCM business plan meets the CFTC’s customer protection requirements.
According to Coinbase Financial Markets, the ability to offer regulated crypto derivatives products to US customers marks a turning point. “We will engage with authorities to get the authorizations required to sell products that are consistent with our mission of using cryptocurrency to modernize the financial system and advance economic freedom and opportunity where Coinbase Financial Markets and its affiliates judge the regulations to be clear and reasonable. By consistently aiming to create the most dependable and secure goods and services, we support this objective.”
Today, that permission was obtained, making it possible for eligible US consumers to use Coinbase Financial Markets to access regulated derivatives products under the CFTC and NFA’s supervision. According to Coinbase Financial Markets, allowing US clients to access regulated cryptocurrency futures, which include a risk of loss, will increase public access to the country’s crypto-economy and maintain it at the forefront of technological innovation.
Getting an FCM authorization for the financial market is what Coinbase needed to provide an accountable and protected derivative market to qualified customers so they could access features of contracts that are regulated. More information will be provided by Coinbase on how recognized United States customers can access their provided futures.
A Key Achievement
A crucial point of access for traders, the global market for crypto derivatives accounts for over 75% of all cryptocurrency trading volume. Customers have leverage and easier access to the cryptocurrency market thanks to the possibility of trading on margin, although there is a potential risk of loss. Investors use derivatives to control the risk of their underlying crypto assets and can express long and short positions. Due to the advantages of its products, FairX, a futures exchange governed by the CFTC and now known as the Coinbase Derivatives Exchange, was purchased by Coinbase Global, Inc. in 2022.
Since then, the retail investor-sized nano Bitcoin and Ethereum futures contracts have been successfully introduced by Coinbase Derivatives Exchange, and on June 5, the institutional market-sized larger counterparts were introduced. The Coinbase Derivatives Exchange is accessible to market makers, FCMs, and third-party brokers. With a notional volume traded in 2023 of $4.7 billion in BTC and $2.0 billion in ETH futures, it has created a significant liquidity pool.
The reason why Coinbase has stayed on in the United States is that it believes that the best way the United States can be served is if it adopts the crypto economy and provides a structure for regulations while maintaining a high standard in consumer protection policies.
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