Highlights:
- Coinbase Financial Markets Inc. can now function as a futures commission agent and provide qualified U.S. users access to cryptocurrency futures through its platform.
- Accounting for approximately 75% of global crypto trading, the crypto derivatives market is a significant gateway to digital asset access.
Leading U.S. cryptocurrency exchange Coinbase Global Inc. recently announced that it’s been granted National Futures Association’s approval to provide digital asset futures to eligible U.S. clients.
The NFA, overseen by the Commodities and Futures Trading Commission, is a self-regulatory entity responsible for governing the U.S. derivatives sector. This includes on-exchange traded futures, managing registration and regulating futures experts, and enforcing compliance with CFTC rules and regulations. Coinbase submitted documentation two years back and has cooperated with regulators since then.
Regulatory clearance has been granted to Coinbase Financial Markets Inc., a Coinbase subsidiary. It can now function as a futures commission agent and provide qualified U.S. users access to cryptocurrency futures through its platform. This permits users to trade crypto assets at set prices and designated future times, akin to actions possible on stock exchanges and other commodities trading platforms.
Coinbase CEO Brian Armstrong announced the approval in a tweet, “Major moment for crypto regulatory clarity in the U.S. This has been a multi-year process toward approval, and we’re excited to finally be launching federally regulated crypto derivatives with margin to our U.S. customers. When there is a clear path to register, we do.”
Submitting its application in September 2021, the company collaborated with regulators to ensure a seamless approval process. Accounting for approximately 75% of global crypto trading, the crypto derivatives market is a significant gateway to digital asset access. According to the company, this move positions Coinbase as the inaugural crypto-native platform to provide both traditional spot trading and regulated, leveraged crypto futures through an integrated solution in the U.S.
Last year, Coinbase acquired FairX, a CFTC-regulated futures exchange, and rebranded it as Coinbase Derivatives Exchange. On June 5, the exchange introduced futures for institutional clients. With NFA approval as a futures commission agent, Coinbase can now extend futures trading to individual users in the U.S.
Coinbase’s Vice President of Institutional Product, Greg Tsuar, stated, “Obtaining FCM approval was our next step in bringing these transparent and secure markets to our customers so they can access regulated futures contracts alongside our liquid spot market. In the coming months, we’ll provide additional information on how our verified U.S. customers can access our futures offering.”
This development coincides with Coinbase being entangled in legal disputes with another regulatory body. The Securities and Exchange Commission filed a lawsuit against Coinbase, claiming the company operated an unregistered securities exchange and broker. Furthermore, the SEC also leveled charges against Coinbase concerning its crypto asset staking rewards program, asserting that the company neglected to register it appropriately.
In a prior conflict with the SEC, Coinbase postponed and eventually called off introducing its cryptocurrency lending product, Coinbase Lend, in September 2021. This followed the SEC’s lawsuit, contending that the product could be deemed a security offering.
