Coinbase Receives Regulatory Approval for Perpetual Futures Trading
Crypto trading platform Coinbase has obtained regulatory approval from the Bermuda Monetary Authority (BMA) to offer perpetual futures trading to retail customers outside of the United States. This news caused a 6.81% increase in COIN shares on the day of the announcement.
Perpetual Futures Comes to Retail
In an effort to partner with global regulators and establish clear rules for the crypto industry, Coinbase introduced perpetual futures trading as part of its “Go Broad, Go Deep” strategy. These futures contracts have been built within compliance standards and have already seen over $5.5 billion in notional trading volume from institutions. Perpetual futures allow traders to open long and short positions without an expiry date, paying a periodic funding rate based on their position’s performance.
This service provides leveraged exposure to cryptocurrency price movements without owning actual cryptocurrencies. Currently, derivatives account for approximately 75% of crypto trading volume globally. Coinbase initially launched perpetual futures trading for institutional clients in May, offering contracts for Bitcoin and Ethereum.
Trading Requirements and User Protections
To access perpetual futures trading as a retail user, you need to open a Coinbase Advanced trading account and pass standard assessment checks. Coinbase stands out from other crypto derivatives platforms due to its compliance standards and user protections.
The company ensures audited financial statements, maintains a USDC-funded insurance fund, and has a dedicated risk team. These measures aim to provide a secure trading environment for users. It’s worth noting that Coinbase is the only publicly traded crypto exchange platform.
Regulatory Hostility For Competitors
Coinbase’s regulatory approval comes at a time when other crypto firms are facing increased scrutiny from global regulators. Many companies have been forced to exit certain regions due to their inability to comply with local laws.
For example, Bybit recently announced its departure from the United Kingdom in anticipation of stricter financial promotion laws. Additionally, Coinbase itself, along with numerous other crypto firms, has faced lawsuits from the U.S. Securities and Exchange Commission (SEC) for non-compliance with local securities laws.
Coinbase emphasized its commitment to building its business and becoming a public company in the U.S., believing that the country should lead efforts to modernize the financial system.
Hot Take: Coinbase Expands Perpetual Futures Trading Offering
Coinbase’s regulatory approval for perpetual futures trading marks a significant milestone for the platform and its customers. By providing retail users with access to these contracts, Coinbase enables them to engage in leveraged trading and benefit from cryptocurrency price movements without actually owning the assets.
With compliance standards, user protections, and a strong reputation in the industry, Coinbase sets itself apart from competitors. This latest approval also highlights the company’s commitment to working with regulators worldwide to establish clear rules for the crypto industry.
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