Coinbase has been approved to provide cryptocurrency futures services to retail traders in the United States.

Coinbase approved to offer crypto futures to US retail traders.

Author: MARTIN YOUNG, COINTELEGRAPH; Translation: Song Xue, LianGuai

Coinbase, the largest digital asset exchange in the United States, has been granted permission to offer cryptocurrency futures to retail traders in the United States, seen as a major regulatory victory in its fierce battle with the U.S. Securities and Exchange Commission.

On August 16th, the National Futures Association (NFA), designated by the U.S. Commodity Futures Trading Commission as a registered futures association, granted Coinbase the license to operate as a Futures Commission Merchant (FCM) platform.

A Prominent Signal

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• CFTC Chairman 70% of cryptocurrency products should be classified as commodities

Some cryptocurrency industry commentators believe that this approval is a significant regulatory victory for Coinbase and the cryptocurrency industry, as the U.S. Securities and Exchange Commission accused the exchange of evading registration of its products.

“If I were a judge, I would wonder why [Coinbase] managed to register with the [CFTC], but the [SEC] claims Coinbase is unwilling to do the hard work of registration,” wrote Avichal Garg, founder of investment management company Electric Capital, in a tweet on August 17th.

Brian Quintenz, former commissioner of the U.S. Commodity Futures Trading Commission (CFTC) and policy executive of cryptocurrency investment firm a16z, stated, “When regulators are willing to engage in constructive dialogue around new technology, both customers and innovation can win.”

Meanwhile, Coinbase CEO Brian Armstrong stated that this approval is an important moment for transparency in U.S. cryptocurrency.

This move also puts Coinbase in a position traditionally held by traditional financial companies.

The Chicago Mercantile Exchange and the Chicago Board Options Exchange, two institutional exchanges, currently offer bitcoin and ethereum futures in the United States.

Coinbase refers to this move as a “significant milestone,” stating that it makes them the first domestic cryptocurrency company to directly offer both spot cryptocurrency trading and futures products.

Entering a Vast Market

In May, CoinGecko reported that the global cryptocurrency derivatives market was valued at just under $30 trillion, with Coinbase emphasizing that the global cryptocurrency derivatives market accounts for about three-quarters of all trading volume.

According to Barron’s, Mizuho Securities analyst Dan Dolev wrote in a report on August 16th, “Given that the global cryptocurrency derivatives market may be three to four times larger than the spot market, this approval expands Coinbase’s potential market.”

Jeff Sekinger of Orca Capital stated, “Coinbase will become a key access point for traders,” adding that their new products will “meet this demand and provide investors with greater exposure and flexibility.”

Meltem Demirors, Chief Strategy Officer at CoinShares, stated, “The U.S. cryptocurrency market is in an exciting moment,” especially considering the shift in U.S. trading hours.

The company initially announced plans to offer BTC and ETH futures contracts in mid-2022. The new approval will allow Coinbase to directly offer cryptocurrency futures to eligible retail investors in the United States, not just institutional clients. However, the exchange did not specify when they will be available.

The company’s stock (COIN) did not react to the news, falling 1.56% in after-hours trading to $77.7; however, Coinbase’s stock price has risen 130% year-to-date.

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