New York: Coinbase Global has gained approval to sell cryptocurrency derivatives directly to retail consumers in the US, the company said Wednesday.
Coinbase Financial Markets, a subsidiary of the US’s biggest crypto exchange, has secured approval from the National Futures Association to operate a Futures Commission Merchant and offer access to crypto futures. The offering will launch within weeks, according to a company spokesperson.
Coinbase has been working on the derivatives push for some time. It applied for the NFA approval almost two years ago. In early 2022, it bought futures exchange FairX, which was already registered with US regulators. Renamed Coinbase Derivatives Exchange, it currently sends traders to buy futures from third-parties such as brokers. But with the NFA approval, Coinbase will be able to provide these same derivatives to users directly, first via Coinbase’s main app.
The offering will let Coinbase dig deeper into a huge market. Cryptocurrency derivatives accounted for 78.2 per cent of total crypto trading volume on centralized exchanges in July, according to researcher CCData. Part of the derivatives’ appeal is that traders can use leverage to buy them. Coinbase will offer leverage, but hasn’t disclosed any details on that yet.
In the US, exchanges like CME and LedgerX already offer derivatives.
The approval comes amid Coinbase’s legal battle with the US Securities and Exchange Commission. The SEC sued Coinbase in June for operating an unregistered national securities exchange, broker, and clearing agency, as well as for selling unregistered securities. Coinbase said the agency doesn’t make registration possible.
“Where regulations are clear and sensible, we will work with regulators to receive the authorizations needed to offer products that align with our purpose of using crypto to update the financial system to advance economic freedom and opportunity,” Greg Tusar, head of institutional products at Coinbase, said in a blog post.
Coinbase already recently rolled out derivatives overseas. In May, it announced Coinbase International Exchange, letting institutional users based in eligible jurisdictions outside of the US to trade perpetual futures. International Exchange handled $2.52 billion in trading volume in the last 30 days, according to its Website.