Coinbase Financial Markets, Inc. Receives NFA Approval for Regulated Crypto Futures Trading

Coinbase Financial Markets, Inc. has secured regulatory clearance from the National Futures Association (NFA), a self-regulatory organization designated by the Commodity Futures Trading Commission (CFTC). This milestone exemplifies Coinbase’s unwavering commitment to conducting business in accordance with regulations, all while providing reliable and innovative crypto-native solutions for the market.

This accomplishment positions Coinbase Financial Markets as a trailblazer among crypto-native entities, providing authorized US clients access to regulated, leveraged, and cash-settled crypto futures. The availability of futures trading will be facilitated through Coinbase Financial Markets.

The significance of regulation and transparency cannot be overstated, particularly in inspiring trust among individuals and institutions. Establishing access to a CFTC-regulated crypto derivatives market holds the key to substantial growth and wider engagement within the crypto economy. Back in September 2021, Coinbase applied to the NFA to register as an FCM. Their collaborative efforts with regulators since then have been aimed at ensuring full compliance with necessary standards and aligning their FCM’s operational model with the CFTC’s safeguards for customer interests.

Coinbase Financial Markets to Offer Futures Trading for Customers

Coinbase Financial Markets interprets this development as a groundbreaking juncture, enabling the introduction of regulated crypto derivatives products to eligible US clients. Coinbase stated that they are committed to partnering with regulators whenever regulations are pragmatic and clear, seeking authorization for products that resonate with their mission of utilizing crypto to modernize the financial landscape and foster economic freedom and opportunity. On their blog page, they expressed a commitment to building trusted and secure products and services that firmly support this mission.

Today, with the achievement of regulatory clearance, eligible US customers can access regulated derivatives offerings through Coinbase Financial Markets, under the vigilant supervision of the CFTC and the NFA. This authorization is poised to provide more individuals with a secure route to engage in the crypto economy while positioning the United States at the forefront of digital innovation.

Securing FCM authorization for Coinbase Financial Markets marks the next stride towards offering transparent and secure derivatives markets to eligible clients, granting them access to regulated futures contracts.

How This is a Significant Achievement

The global crypto derivatives market accounts for roughly 75% of worldwide crypto trading volume, serving as a pivotal entry point for traders. Margin trading empowers customers with leverage and access to the crypto market, requiring less initial investment, although with potential loss. By enabling long and short positions, investors also leverage derivatives to mitigate risks linked to their underlying crypto assets.

These advantageous features motivated Coinbase Global, Inc. to acquire FairX in 2022, a CFTC-regulated futures exchange now known as the Coinbase Derivatives Exchange. This strategic move facilitated the introduction of nano Bitcoin and Ethereum futures contracts tailored for retail investors. Subsequently, larger versions aimed at institutional clients were introduced on June 5. The Coinbase Derivatives Exchange welcomes third-party brokers, FCMs, and market makers. It has cultivated a robust liquidity pool, with $4.7 billion in BTC and $2.0 billion in ETH futures traded in notional volume thus far in 2023.

The decision of Coinbase Global, Inc. to go public in the US reflects its confidence that the US would embrace the crypto economy and establish a regulatory framework that upholds the highest standards in safeguarding consumer interests.

 

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