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Coinbase Gets Greenlight for Crypto Futures Trading While ETF Decision Delayed to 2024

Published August 16, 2023 4:56 PM
Omar Elorfaly
Published August 16, 2023 4:56 PM

Key Takeaways

  • Coinbase acquired a license as a registered Futures Commission Merchant
  • Futures contracts trading marks a keystone in the company’s future
  • Asset managers in the crypto space still await SEC approval on spot ETF applications

On Wednesday, August 16, Coinbase, announced  receiving approval to become a registered Futures Commission Merchant. Accordingly, Coinbase is now eligible to offer futures contracts in Bitcoin and Ethereum to qualifying customers in the U.S.

Futures Contracts Fuel Coinbase’s Future

The National Futures Association, a CFTC-designated SRO, granted Coinbase’s license to trade futures contracts. 

The company’s announcement states:  “At Coinbase, we believe regulation and transparency are critical and build confidence for individual customers and institutions. Access to a CFTC-regulated crypto derivatives market is essential to unlocking significant growth and enabling broader participation in the cryptoeconomy.”

The company applied for the license back in 2021 with the NFA to register an FCM. 

“Our team has worked with regulators since then to ensure we will comply with all the necessary regulations and that our FCM’s business model meets the CFTC’s customer protection requirements.”

Coinbase explains why acquiring the license is a major milestone in the company’s journey. 

“The global crypto derivatives market represents ~75% of crypto trading volume worldwide and is a critical trader access point.”

“Being able to express long and short positions, investors also use derivatives to manage risk on their underlying crypto assets.”

As it currently stands, Coinbase seems to be skyrocketing its business success. Being named a surveillance partner on multiple ETF applications filed by key financial institutions such as BlackRock and Fidelity helped secure the company’s future in the market.

Moreover, the company received a surge of optimism when Ripple’s won its case against the US Securities and Exchange Commission, in which the regulating body claimed the company traded in unregistered securities, the same claim Coinbase faces in its own SEC case.

SEC Says No Spot, Only Futures, For Now

The applications mentioned above aim to lead to the approval of Bitcoin spot ETFs from the SEC. Among key applicants are BlackRock, Fidelity, and Valkyrie, three of the world’s biggest asset managers with over $12 trillion managed in assets.

The surge of spot ETF applications followed the news of BlackRock applying for the license. Since then, these financial institutions have been in constant negotiations with the SEC regarding the prerequisites needed before receiving approvals.

In recent news, the SEC announced  that it will not be approving any spot ETF applications for now. The regulating body is entitled to 240 days until it must provide an answer to such applications.

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