Coinbase took first steps in its decision to start trading crypto futures and now it seeks to join the National Futures Association which is a self-regulating group for derivatives trading so let’s read more in our latest Coinbase news.
Coinbase announced that it filed with the National Futures Association to become a registered futures commission merchant which shows that the exchange is seeking to go even further than spot trading and enter the business of derivatives trading where people can bet on their future prices. The typical derivatives include futures and options contracts and allows people to buy and sell contracts that establish the BTC price or the price of any other crypto at a certain time in the future. If you think that the price will go down, you can try and sell it for a higher price and make money on the difference. The options contracts work similarly but allow the traders the option to purchase or to sell at a predetermined price and the perpetual contracts futures that don’t expire are another popular option.
In the US, any business that seeks to sell individuals has to register with the Commodity Futures Trading Commission as the federal regulator of all derivatives products. But to do so, they have to be members of the NFA which handles the registration process on the agency’s behalf. Derivatives trading is a huge business in traditional financial markets and in crypto so futures volume on Binance gets the volume on the exchanges by a factor of 3 to 1. The disparity is even bigger on the FTX which is a global crypto exchange that makes a huge advertising push in the states.
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
Coinbase took first steps now in the new field and watched its competitors creating $150 billion markets for crypto derivatives. But while it can be the leader in American spot exchanges, it cannot continue to credit exotic territory to the rivals.
As recently reported, Gary Gensler hinted that most of these assets are listed on Coinbase and they could be securities. The remarks came as the SEC and Coinbase are in the ongoing fight over crypto regulation and the stakes in the ongoing battle are only getting higher as SEC Chair Gensler believes that the exchange in the US could be breaking the law. Speaking during a hearing convened by the Senate Banking Committee, Gensler said that Coinbase didn’t have a license to operate as a stock exchange even though it has plenty of tokens that could securities.
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