Coinbase has secured regulatory approval from the National Futures Association (NFA), a self-regulatory organization designated by the Commodity Futures Trading Commission (CFTC), to operate as a Futures Commission Merchant (FCM).
This authorizes the platform to offer eligible U.S. customers access to crypto futures, marking a significant milestone in the evolution of crypto regulation in the country.
With this approval, Coinbase is the first crypto-native platform to offer traditional spot crypto trading and regulated, leveraged crypto futures through an integrated trading solution, according to a Coinbase statement.
As Coinbase explained, this approval is part of a broader effort to promote regulation and transparency in the crypto industry—two elements they believe are pivotal to individual and institutional confidence. By ensuring access to a CFTC-regulated crypto derivatives market, Coinbase aims to spur significant growth and enable broader participation in web3.
Since applying with the NFA in Sept. 2021, Coinbase has worked toward meeting the stringent customer protection requirements of the CFTC and demonstrating a robust business model. The company argues that the U.S., by “embracing the cryptoeconomy,” provides a regulatory framework that prioritizes high standards in consumer protection.
This approval may be a turning point for providing regulated crypto products to U.S. customers. Coinbase advocates for “clear, sensible regulations” and is committed to working with authorities to secure product permissions.
The news may also impact the global crypto derivatives market, representing about 75% of worldwide crypto trading volume. The benefits of derivatives – including the ability to trade on margin, expressing long and short positions, and managing risk on underlying assets – have driven the popularity of the crypto derivatives market.
As the dynamics of the crypto market continue to shift under the influence of various industry players, Coinbase’s milestone establishes a critical precedent for the role of regulatory compliance in the move toward broader adoption of cryptocurrency trading.
Further, Coinbase’s potential role in securing the first spot-Bitcoin ETF could be legitimized somewhat by this CFTC approval. The company is listed as a surveillance-sharing partner in several spot Bitcoin ETF applications filed in 2023.
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