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Coinbase is making crypto futures available for USA retailers. Coinbase plans to launch its first derivative product with a nano Bitcoin futures contract.
Following legal approval, the company announced that its crypto futures trading service, aimed at Coinbase’s largest US retail customers, is now active. This service is expected to release nano bitcoin contracts (BIT). Coinbase Financial Markets, or CFM, aims to provide customers with leveraged crypto futures contract trading. Additionally, the aim here is to draw retail traders into the market.
The company stated in its announcement that “customers in the US can now access regulated crypto futures contracts.” However, these futures contracts are specially sized for retail investors and are 1/100 of Bitcoin’s value and 1/10 of Ethereum’s value.
In an August announcement regarding regulatory approval, Coinbase stated that the National Futures Association’s self-regulatory organization had approved it to operate as a futures commission merchant. At the time, the company said it represented approximately 75% of the global crypto derivative market and was a critical trader access point.
Coinbase, in expanding its trading options with the new service, highlighted the increased adverse risk carried by futures. The company used the phrases “Futures allow investors to hedge their risks, diversify their portfolios, trade with leverage, and make predictions about the market direction.” It also warned, “Leverage in futures trading can work for or against you. The risk of losing due to leverage can exceed your initial investment amount“. The company announced that all future contract transactions will be in US dollars.
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Corporate services
Last year, Coinbase, having bought the futures exchange FairX under the supervision of the Commodity Futures Commission (CFTC), set up its own derivatives exchange. The platform launched new Bitcoin and Ethereum futures contracts for corporate customers in June, open to third-party brokers and market makers.
Coinbase’s efforts to expand operations and serve more customers are based on an ongoing regulatory struggle with the Securities and Exchange Commission. Earlier this year, the regulatory agency accused Coinbase of not registering as a securities exchange, broker, and clearinghouse. The crypto exchange responded by arguing that the agency had limited jurisdiction to securities transactions.
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