Coinbase, the United State’s leading digital asset exchange, has secured the regulatory green light to introduce cryptocurrency futures to American investors. Given its heated legal battle with the nation’s securities watchdog, it is a notable victory.
Accordingly, the National Futures Association (NFA), recognized by the US commodities regulator as an authorized futures association, has granted Coinbase permission to establish and operate a platform for Futures Commission Merchant (FCM) activities.
A Win For Coinbase And Crypto
Some industry observers see this approval as a significant regulatory win for Coinbase and the broader digital asset landscape. This recognition is critical in light of the US Securities and Exchange Commission’s (SEC) allegations against the country’s leading crypto exchange.
The commission accused Coinbase of purposefully avoiding formal procedures to register its various offerings as stated by law. According to the former CFTC Commissioner Brian Quintenz, now the policy lead at cryptocurrency investment firm a16z, a cordial relationship between regulators and novel technology platforms can pave the way for progress for all market participants.
Similarly, Coinbase CEO Brian Armstrong hailed the approval as a landmark moment in the history of cryptocurrencies in the United States. The latest development has also placed Coinbase in a position typically held by traditional financial institutions.
Compared to the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE), Coinbase is the first crypto-native establishment to seamlessly provide both traditional spot cryptocurrency trading and futures offerings in the same market.
Coinbase Eyes Global Derivatives Market
According to a May 2023 prediction by CoinGecko, the global value of the crypto derivatives market is shy of $3 trillion. Coinbase also stated that this sector accounts for approximately three-fourths of all trading activities in the crypto space.
Per Dan Dolev, an analyst at Mizuho Securities, in an August 16th commentary, this recent endorsement has significant implications, expanding the American exchange’s potential market scope and user base.
On the Other hand, Orca Capital’s Jeff Sekinger predicts that Coinbase will emerge as a pivotal gateway for traders. He argued that it would offer the latest financial products that meet the rising market demand, thereby increasing exposure and flexibility for investors.
According to Meltem Demirors, the Chief Strategy Officer at CoinShares, there is a buzz in the US cryptocurrency ecosystem following the latest development as the approval leads to several side benefits. In another update, Demirors stated that CoinShares is preparing for another game-changing move: the actualization of the company’s plans to launch futures contracts for BTC and ETH.
Meanwhile, the company’s willingness to broaden its horizons by offering crypto futures directly to eligible retail customers in the United States has recently attracted the industry’s interest. This is a departure from their previous focus of solely serving institutional clients.
While the exact launch date is unknown, this strategic move marks a significant change in the US crypto landscape. Notably, the recent approval of Coinbase futures product has had little impact on the company’s stock (COIN).
COIN fell 1.56% during the day and closed at $77.7 after trading hours. It is worth noting that the performance of Coinbase shares has been quite impressive this year, recording a remarkable 130% increase so far.