Coinbase is Coming for the Sizable and Lucrative Futures and Derivatives Market in the US


Cryptocurrency exchange Coinbase is now venturing into cryptocurrency derivatives.

The biggest crypto trading platform in the US has filed an application with the National Futures Association on Wednesday to register as a futures commission merchant.

According to the filings, the company is registering as Coinbase Financial Markets Inc.

Currently, Coinbase only offers spot buying and selling, but it is the derivatives market that has a much bigger size. For instance, In the past 24 hours, Binance recorded more than $17 billion in Bitcoin futures trading volume, dwarfing the volume handled by its spot exchange by a factor of 3.

Most of the exchanges, Binance, OKEx, FTX, and others, offer derivatives products but not to US-based customers due to regulatory uncertainty.

CME is the largest regulated crypto derivatives platform in the US which listed Bitcoin futures in December 2017; soon after, Cboe was the first to launch crypto futures, and earlier this year started offering Ether futures as well.

FTX.US has also acquired the CFTC-regulated LedgerX to offer trading in futures, options, and swaps on Bitcoin and Ether to capture the “huge untapped opportunity.”

In order to offer derivatives products in the US market, the business must register with the Commodity Futures Trading Commission (CFTC), the federal regulators of all derivatives products. Before that, they must be the members of NFA first, the organization which handles the registration process on the regulatory agency’s behalf.

With this step, Coinbase also wants to tap into the much lucrative and bigger derivatives market. Ever since its direct listing on Nasdaq in April, Coinbase has been expanding its business. The exchange has been aggressively expanding the tradable assets on its platforms, having listed Dogecoin (DOGE) and Axie Infinity (AXS), among many other altcoins and DeFi coins that have gained immense traction in the community.

Coinbase has also set aside capital to fund its marketing efforts, planning to launch a lending product, and is already offering staking services for Proof-of-Stake (PoS) networks.

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