Coinbase Launches Crypto Futures Trading for Retail U.S. Customers
Coinbase has announced the launch of its service offering crypto futures trading to eligible retail customers in the United States. The service, provided through Coinbase Financial Markets (CFM), aims to provide leveraged crypto futures contracts trading to customers.
The futures contracts available are specifically sized for retail traders, with “nano” bitcoin contracts and 1/10th of an Ethereum. All contracts will be settled in U.S. dollars.
Risk and Benefits of Futures Trading
Coinbase pointed out that while futures trading provides traders with the ability to hedge risk, diversify portfolios, and trade with leverage, there is also greater downside risk involved. Leverage in futures trading can work for or against traders, with the risk of loss exceeding the initial investment amount.
Institutional Services
Last year, Coinbase acquired FairX and created the Coinbase Derivatives Exchange, a CFTC-regulated futures exchange. The platform launched new bitcoin and ether futures contracts tailored for institutional clients.
Regulatory Battle
Coinbase’s expansion efforts come amidst a regulatory battle with the Securities and Exchange Commission (SEC). Earlier this year, Coinbase was charged by the SEC for not registering as a securities exchange, broker, and clearing agency. Coinbase argues that the SEC’s authority is limited to securities transactions.
Hot Take: Coinbase Expands Crypto Futures Trading Services to Retail Customers in the U.S.
Coinbase has launched its crypto futures trading service for eligible retail customers in the United States. This move allows retail traders to access regulated crypto futures contracts through Coinbase Financial Markets (CFM). While there are benefits such as risk hedging and portfolio diversification, Coinbase warns of the greater downside risk involved in futures trading. The company settled all futures contracts in U.S. dollars. Additionally, Coinbase has been expanding its institutional services with the creation of the Coinbase Derivatives Exchange. However, Coinbase is currently engaged in a regulatory battle with the SEC regarding its registration as a securities exchange.
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