Coinbase cleared to offer regulated crypto futures to eligible US customers

Despite its ongoing legal battles with the SEC, Coinbase has gained approval from another regulator to offer eligible US customers access to crypto futures directly from its platforms.

The clearance to operate as a futures commission merchant (FCM) came from the National Futures Association, a self-regulatory organization designated by the Commodity and Futures Trading Commission (CFTC), Coinbase revealed Wednesday. 

“Offering US investors access to secure and regulated crypto futures is key to unlocking growth and enabling broader participation in the crypto economy,” Coinbase Financial Markets CEO Andrew Sears told Blockworks in an email.

Coinbase filed an application to the NFA to register as an FCM in September 2021. 

The crypto exchange went on to acquire CFTC-regulated futures exchange FairX — now known as the Coinbase Derivatives Exchange — the following year. Open to third-party brokers, FCMs and market makers, the derivatives exchange has traded year-to-date notional volume amounting to $4.7 billion in BTC futures contracts and $2 billion in ETH futures.

Coinbase said when it bought the futures exchange that it planned to eventually “leverage FairX’s infrastructure to offer crypto derivatives to all Coinbase customers in the US.” 

Access to crypto futures will first be available to users of Coinbase Advanced Trade in a few weeks, a spokesperson told Blockworks Wednesday. It will then become available to customers of institutional-focused prime brokerage platform Coinbase Prime later on, the representative added.

“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,” Greg Tusar, Coinbase’s head of institutional products, wrote in a Wednesday blog post.

The global crypto derivatives market — giving investors the ability to manage risk via long and short positions — represents roughly 75% of global crypto trading volume, according to Coinbase. 

CME Group reported that the average daily volume for its crypto futures and options during the second quarter amounted to 38,600 contracts. 

“Under the supervision of the CFTC and NFA, Coinbase will be able to offer regulated futures in a manner that protects consumers and helps ensure that the US remains a center for digital innovation,” Coinbase Chief Policy Officer Faryar Shirzad said.

Coinbase’s clearance to offer crypto futures to US customers comes as the exchange is engaged in a legal battle with the SEC. The regulator sued the publicly traded company in June, alleging that it has been operating as an unregistered exchange — charges Coinbase has denied.  

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