Coinbase unveils crypto futures trading for eligible US traders

November 1, 2023 at 5:00 pm

Edited by Brian Stone

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Coinbase unveils crypto futures trading for eligible US traders

Coinbase Financial Markets has officially launched crypto futures trading for eligible US traders, following its approval to operate as a futures commission merchant by the National Futures Association.

Coinbase Financial Markets has expanded its offerings by introducing crypto futures trading to eligible US traders. This move follows the company’s clearance to operate as a futures commission merchant by the National Futures Association in August.

A futures contract represents a legal agreement to purchase or sell an asset at a predetermined price at a specified future date. For traders, futures offer a range of strategic benefits, including risk hedging, portfolio diversification, leveraged trading, and the ability to speculate on market directions.

To access these crypto futures, US traders are required to utilize the Coinbase Advanced trading platform and possess a spot trading account with the exchange. The contracts are deliberately sized to accommodate retail traders, with 1/100th of a Bitcoin (BTC) and 1/10th of Ethereum (ETH), ensuring lower initial capital requirements and rendering it a more accessible investment option.

The global crypto derivatives market constitutes approximately 75% of the global crypto trading volume. Coinbase’s foray into this domain has potential implications for the company’s revenue diversification, especially given the decline in spot trading volumes.

Analysts from Compass Point Research and Trading and Owen Lau from Oppenheimer & Co. have expressed optimism about the long-term benefits of this expansion, highlighting its potential to establish Coinbase as a leading futures provider in the US.

This development occurs amidst Coinbase’s ongoing legal battle with the US SEC, which has charged the company with operating as an unregistered exchange, a claim that Coinbase contests. Prior to this US launch, Coinbase had extended perpetual futures trading to non-US institutional investors in May and to retail users outside the US in September.