The cryptocurrency exchange Coinbase is now venturing into cryptocurrency derivatives.
The largest crypto trading platform in the United States filed an application with the National Futures Association (NFA) on Wednesday to register as a futures commission merchant.
According to the records, the company is registering as Coinbase Financial Markets Inc.
Today, Coinbase filed an application with the NFA to register as an FCM → Futures Commission Merchant.
This is the next step to broaden our offerings and offer futures and derivatives trading on our platforms.
? Goal: Further grow the cryptoeconomy.
— Coinbase (@coinbase) September 15, 2021
Currently, Coinbase only offers spot buying and selling, but the derivatives market is much larger in size. For example, in the past 24 hours, Binance saw more than $17 billion in Bitcoin futures trading, dwarfing the volume of its spot exchange by a factor of three.
Most exchanges, Binance, OKEx, FTX and others, offer derivative products, but not for US-based clients due to regulatory uncertainty.
CME is the largest regulated crypto derivatives platform in the US, listing Bitcoin futures in December 2017; Shortly thereafter, Cboe was the first to launch crypto futures and began offering Ethereum futures earlier this year.
FTX.US has also acquired the CFTC-regulated LedgerX to offer trading in futures, options and swaps on Bitcoin and Ether to take advantage of the huge untapped opportunity.
In order to be able to offer derivative products in the US market, the company must register with the Commodity Futures Trading Commission (CFTC), the federal regulator for all derivative products. Before doing this, they must first be members of the NFA, the organization that handles the registration process on behalf of the regulator.
With this step, Coinbase wants to open up the much more lucrative and larger derivatives market. Coinbase has been expanding its business since being listed directly on the Nasdaq in April. The exchange has aggressively expanded the tradable assets on its platforms by listing Dogecoin (DOGE) and Axie Infinity (AXS) alongside many other altcoins and DeFi coins.
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