The largest U.S. digital asset exchange, Coinbase, was allowed to offer cryptocurrency futures to U.S. retail customers, seen as a major regulatory victory in a bitter battle with U.S. securities regulators.
On Aug. 16, the National Futures Association (NFA), designated by the U.S. commodity regulator as a registered futures association, granted Coinbase a license to operate a futures commission merchant (FCM) platform.
loud signal
Some cryptocurrency industry commentators see the approval as a major regulatory win for Coinbase and cryptocurrencies, given that the SEC has accused the exchange of evading registration of its products.
Avichal Garg, founder of investment management company Electric Capital, said: “If I were a judge, I would wonder why (Coinbase) managed to register with (CFTC), but (SEC) claimed that Coinbase was not willing to do the hard work of registration.” In a tweet on the 17th.
Get FCM by @CFTC is a big deal. It takes years of work.
if i were a judge i would wonder why @coinbase try to register @CFTC However @SECGov Claiming that Coinbase is unwilling to do the onerous registration work. https://t.co/axDHt8ya3F
— Avichal – Electric ϟ Capital (@avichal) August 16, 2023
Former CFTC Commissioner Brian Quintenz, head of policy at cryptocurrency investment firm a16z, explain “When regulators are willing to engage in constructive dialogue around new technologies, both customers and innovation can win.”
Meanwhile, Coinbase CEO Brian Armstrong said the approval is an important moment for cryptocurrency transparency in the United States.
The move also puts Coinbase in a position typically left at the helm by traditional financial firms.
Two institutional exchanges, CME and CBOE, currently offer bitcoin and ethereum futures in the United States.
Coinbase called the move a “major milestone,” adding that it makes it the first cryptocurrency-native firm to directly offer traditional spot cryptocurrency trading and futures products.
Enter a huge market
May, CoinGecko report The global cryptocurrency derivatives market is worth just under $3 trillion, and Coinbase highlighted that the global cryptocurrency derivatives market accounts for about three-quarters of all trading volume.
“Since the global cryptocurrency derivatives market is likely to be three to four times larger than the spot market, the This approval increases Coinbase’s total addressable market.” report Barron’s.
Jeff Sekinger of Orca Capital explain “Coinbase will be a key access point for traders,” he added, adding that its new product will “fill that need and provide investors with greater exposure and flexibility.”
Meltem Demirors, Chief Strategy Officer, CoinShares explain These are “exciting times for the U.S. cryptocurrency market,” especially given the shift in U.S. trading hours.
related: Coinbase Derivatives Exchange to Launch BTC and ETH Futures
The company initially announced plans to offer BTC and ETH futures contracts in mid-2022. The new approval will allow Coinbase to offer cryptocurrency futures directly to eligible U.S. retail clients, not just institutional clients. However, the exchange did not specify when it would be available.
Shares of the company (COIN) did not react to the news, falling 1.56% to $77.7 in after-hours trading on the day; however, Coinbase shares are up 130% so far this year.
Cointelegraph has reached out to Coinbase for further comment.
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