Coinbase has achieved a significant milestone in its quest to offer a broader spectrum of financial products to its U.S. clientele.
The company has announced that its subsidiary, Coinbase Financial Markets Inc., has been approved by the Commodity Futures Trading Commission (CFTC) to function as a Fully Registered Futures Commission Merchant (FCM).
Coinbase’s foray into the derivatives sector isn’t a recent endeavor. In September 2021, the company submitted an application to the National Futures Association (NFA) seeking FCM registration. Since that filing, Coinbase has continuously engaged with regulators, ensuring that their business model aligns with the CFTC’s customer protection requirements. Their decision to become a public company in the U.S. was rooted in the belief that the U.S., with its robust regulatory framework, would be at the forefront of the crypto economy, ensuring the highest standards in consumer protection.
In January 2022, the company made a strategic acquisition of FairX, a futures exchange that had the backing of the CFTC. This platform was subsequently rebranded as the Coinbase Derivatives Exchange. Under its new identity, the exchange wasted no time in rolling out nano-sized Bitcoin and Ethereum futures contracts, specifically designed with the retail investor in mind. Fast forward to 5 June 2023, and the exchange expanded its offerings by launching larger contract versions tailored for the more substantial institutional market segment.
The Coinbase Derivatives Exchange has been designed to be inclusive. It’s not just an exclusive playground for Coinbase; the platform is open to third-party brokers, other FCMs, and market makers. This inclusivity has paid dividends. The exchange has rapidly established itself as a liquidity hotspot in the derivatives market, boasting a whopping $4.7 billion in BTC and $2.0 billion in ETH futures traded in terms of notional volume in 2023.
Featured Image Credit: Photo via Coinbase