- On Wednesday morning, the company’s stock increased by 3% due to the announcement.
- More than 75% of all cryptocurrency trades take place via derivatives.
- Coinbase has frequently warned that this hostile regulatory approach would drive crypto innovation and jobs overseas.
Significant regulatory permission obtained by Coinbase will enable the company to give US-based investors access to the cryptocurrency derivatives market. On Wednesday morning, the company’s stock increased by 3% due to the announcement.
Nearly two years after Coinbase submitted its application to register as a futures merchant, the application has been approved by the National Futures Association, a self-regulatory group certified by the Commodity Futures Trading Commission.
Cryptocurrency futures
More than 75% of all cryptocurrency trades take place via derivatives, but until recently, such products were unavailable to American investors due in part to their complexity and high levels of risk.
With the help of derivatives, traders may make predictions about price changes without actually holding the underlying asset, which in this case would be a cryptocurrency like Bitcoin.
According to Faryar Shirzad, chief policy officer at Coinbase, “This is a significant milestone for bringing federal regulatory oversight over the crypto markets.”
Coinbase will be able to provide regulated futures under the watchful eyes of the CFTC and NFA in a way that safeguards consumers and ensures that the US remains a hub for digital innovation.
The Securities and Exchange Commission sued Coinbase and its rival Binance in June, and Coinbase and other cryptocurrency companies have frequently warned that this hostile regulatory approach would drive crypto innovation and jobs overseas. Many see the CFTC as the more pro-crypto US agency as it oversees the derivatives sector.
The CEO of Coinbase Financial Markets, Andrew Sears, stated that providing US investors with access to safe and regulated crypto futures is essential to fostering growth and enabling wider involvement in the crypto economy.
