Coinbase has successfully gained regulatory approval to offer crypto futures trading to eligible retail customers in the United States, a service now live and featuring “nano” bitcoin contracts, according to the company’s statement. Through Coinbase Financial Markets (CFM), the largest U.S. cryptocurrency exchange intends to provide leveraged crypto futures contract trading for its customers.
In the company’s announcement, it stated, “Customers in the U.S. can now access regulated crypto futures contracts. These futures contracts are specifically sized for retail traders, at 1/100th of a Bitcoin and 1/10th of an Ethereum.”
Coinbase had previously revealed in August that it had secured regulatory approval from the National Futures Association, a self-regulatory organization designated by the Commodity Futures Trading Commission, to operate as a futures commission merchant. Coinbase underlined that the global crypto derivatives market represents about 75% of the total crypto trading volume worldwide and serves as a crucial access point for traders.
While this new service introduces trading options for Coinbase customers, the company also noted the increased downside risk associated with futures trading. Coinbase explained, “Futures provide traders with the ability to hedge their risk, diversify their portfolios, trade with leverage, and speculate on the market’s direction, either upwards or downwards. The use of leverage in futures trading can result in gains or losses exceeding the initial investment.”
All futures contracts on Coinbase will be settled in U.S. dollars.
In the previous year, Coinbase established the Coinbase Derivatives Exchange after acquiring FairX, a CFTC-regulated futures exchange. The platform, accessible to third-party brokers, FCMs, and market makers, introduced new bitcoin and ether futures contracts tailored for institutional clients in June.
Coinbase’s efforts to expand its business operations and serve more customers coincide with its ongoing regulatory dispute with the Securities and Exchange Commission. Earlier this year, the regulator accused Coinbase of failing to register as a securities exchange, broker, and clearing agency. Coinbase has argued that the agency’s jurisdiction is limited to securities transactions.