Cryptocurrency trading platform Coinbase Global said on Wednesday it had secured approval to offer regulated bitcoin futures trading to U.S. retail customers, scoring a major regulatory win even as it battles a lawsuit from the Securities and Exchange Commission (SEC). The approval by the National Futures Association allows Coinbase to officer bitcoin and ether futures directly to eligible U.S. customers, enabling them to speculate on price movements without owning the underlying asset. Futures are contracts that give the holder the right to buy or sell assets later for a fixed price. Coinbase has been preparing to launch a US-regulated bitcoin futures product for some time. Earlier this year, It had opened a futures market for its institutional clients.
The move by the Nasdaq-listed company opens up a potentially huge new revenue stream for Coinbase, which claims that the derivatives market accounts for some 75% of global crypto trading volumes. It also marks a significant milestone in the long-running legal battle with the SEC, which has sued Coinbase and rival Binance for operating as unregistered securities exchanges. Coinbase has repeatedly warned that the hostile regulatory climate in the U.S. could push crypto innovation and jobs overseas.
In a blog post, Coinbase said the NFA approval was a critical step in its efforts to open up the futures market for all investors. It had previously offered a crypto futures market for its institutional clients, but this latest development allows the firm to expand into a much larger retail client base. The company said it would launch a waitlist for the new product to manage interest.
Coinbase plans to launch a full suite of cryptocurrency futures products in the coming months, including Bitcoin and ether. The firm expects liquidity pools of $4.7 billion BTC and $2 billion ETH in notional value, with the upcoming availability of futures for both coins to complement existing spot trading. The firm has been laying the groundwork for offering futures for some time, having acquired a CFTC-regulated exchange, FairX, in 2022 called Coinbase Derivatives Exchange. It launched nano bitcoin and ether futures contracts in June, with larger versions for institutional traders to follow.
This is the first time a purely cryptocurrency-focused exchange has received NFA approval for regulated futures trading, which should bolster confidence in this growing market. The move by Coinbase will allow the company to bring a safer, more standardized trading experience to retail investors. The NFA is one of the federal regulators that oversees futures markets, along with the CFTC. Coinbase will be overseen by both regulators in the U.S., a move that should ensure that it complies with all applicable regulations. The company’s shares rose by about 1% in premarket trading on Wednesday.
