Coinbase Receives Regulatory Approval to Offer Crypto Futures
Cryptocurrency exchange Coinbase has received regulatory approval from the Commodities Futures Trading Commission (CFTC) to offer crypto futures trading to its customers in the U.S. This move could potentially merge two of Bitcoin’s markets and drive further adoption. Coinbase Financial Markets, the newly registered merchant, will provide spot crypto trading and crypto futures, which serve as the basis for Bitcoin ETFs in the U.S.
Main Points:
- Bitcoin futures ETFs do not accurately track Bitcoin’s performance and have underperformed this year.
- Coinbase Financial Markets offering both spot crypto trading and crypto futures will improve liquidity and reduce disparities between spot price and futures contracts.
- A spot Bitcoin ETF, which tracks the coin’s price, is highly anticipated in the crypto community but has not yet been approved by the SEC.
- Coinbase’s approval to operate as a futures commission merchant (FCM) allows it to offer crypto futures services, which is difficult for many crypto-native market participants to access.
- Currently, the options for hedging risk in the U.S. are limited to Bitcoin and Ethereum futures, but uncertainty surrounding Ethereum’s classification as a commodity or security poses challenges.
Hot Take:
Coinbase’s regulatory approval to offer crypto futures is a significant development for institutional adoption. By providing seamless access to both spot crypto trading and futures, Coinbase improves liquidity and creates opportunities for institutions to hedge risk in a regulatory-compliant manner. The approval also highlights the challenges faced by crypto-native market participants in accessing futures markets and the limited options for hedging risk in the U.S. The introduction of crypto futures services by Coinbase may pave the way for greater access and participation by institutions in derivatives markets.
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