Coinbase Wins Approval to List Crypto Futures in U.S.

Coinbase the largest cryptocurrency exchange in the U.S. has received key regulatory approval that will allow it to offer crypto futures and options to its customers. This is a significant milestone for the crypto industry, opening up new opportunities for investors to access the fast-growing crypto derivatives market.

According to a blog post by Coinbase, its subsidiary Coinbase Financial Markets has secured approval from the National Futures Association (NFA), a self-regulatory body designated by the Commodity Futures Trading Commission (CFTC), to operate as a Futures Commission Merchant (FCM). This means that Coinbase can now act as a broker-dealer for crypto futures and options, which the CFTC regulates.

Crypto futures and options allow traders to bet on the future price movements of cryptocurrencies without owning or storing the underlying assets. These contracts can be used for hedging, speculation, or arbitrage purposes and provide leverage and liquidity to the crypto market.

Coinbase said that crypto futures and options comprise more than 75% of all global crypto trades, but they have been largely unavailable for U.S. investors due to regulatory barriers. Coinbase’s approval as an FCM is expected to change that, as it will enable Coinbase to offer regulated and compliant crypto futures products to its eligible customers in the U.S.

Coinbase’s chief policy officer Faryar Shirzad said this approval is a “critical milestone that reaffirms our commitment to operate a regulated and compliant business.” He added that offering U.S. investors access to secure and regulated crypto futures is key to unlocking growth and enabling broader participation in the crypto economy.

Coinbase’s CEO of Financial Markets, Andrew Sears, said that Coinbase is excited to bring its expertise and innovation to the crypto derivatives market. He said that Coinbase will leverage its technology, liquidity, and customer base to create a “world-class” crypto futures platform that will meet the needs and expectations of institutional and retail investors alike.

Coinbase’s approval as an FCM comes amid growing regulatory scrutiny of the crypto industry in the U.S. The Securities and Exchange Commission (SEC) has recently sued Coinbase and its rival Binance over alleged violations of securities laws related to their crypto lending products. Coinbase has also criticized some lawmakers and regulators for its lack of customer protection and transparency.

However, Coinbase has also received support from some pro-crypto officials and advocates, who have urged the regulators to adopt a more balanced and constructive approach toward crypto innovation. Many view the CFTC, which oversees the derivatives market, as the more crypto-friendly regulator in the U.S., showing more openness and flexibility towards crypto products and platforms.