Coinbase Receives Approval from CFTC for Futures Commission Merchant Status
Coinbase, a prominent figure in the cryptocurrency exchange landscape, has achieved a significant milestone in its quest to offer a broader spectrum of financial products to its U.S. clientele. The company’s subsidiary, Coinbase Financial Markets Inc., has been approved by the Commodity Futures Trading Commission (CFTC) to function as a Fully Registered Futures Commission Merchant (FCM).
Key Points:
- Coinbase submitted an application to the National Futures Association (NFA) in September 2021 for FCM registration.
- Coinbase has been in continuous dialogue with regulators to ensure compliance with customer protection requirements.
- The company believed that the U.S.’s robust regulatory framework would position it as a leader in the crypto economy.
- In January 2022, Coinbase acquired FairX, a futures exchange backed by the CFTC, and rebranded it as the Coinbase Derivatives Exchange.
- The exchange offers nano-sized Bitcoin and Ethereum futures contracts for retail investors and larger contract versions for institutional investors.
The Coinbase Derivatives Exchange is not exclusive to Coinbase, as it is open to third-party brokers, other FCMs, and market makers. Since its launch, it has become a liquidity hotspot in the derivatives market, with over $4.7 billion in BTC and $2.0 billion in ETH futures traded in terms of notional volume in 2023.
Hot Take:
Coinbase’s approval as a Fully Registered Futures Commission Merchant by the CFTC is a significant achievement for the company. It demonstrates Coinbase’s commitment to expanding its financial product offerings and complying with regulatory requirements. The Coinbase Derivatives Exchange’s inclusive approach has contributed to its success, attracting both retail and institutional investors. With its strong foothold in the derivatives market, Coinbase is well-positioned to continue driving innovation and growth in the cryptocurrency industry.
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