Coinbase Financial Markets has officially unveiled its crypto futures trading platform for qualified US traders, a milestone achievement following its authorization to function as a futures commission merchant by the National Futures Association.
Coinbase Financial Markets has broadened its service range, introducing crypto futures trading to qualified US-based traders. This development comes on the heels of the company receiving approval to function as a futures commission merchant from the National Futures Association in August.
A futures contract is a binding agreement that stipulates the buying or selling of an asset at a predetermined price on a specified future date. For traders, futures trading offers various strategic advantages, such as the mitigation of risk, diversification of portfolios, the opportunity to engage in leveraged trading, and the ability to speculate on the direction of the market.
In order to participate in these crypto futures, US traders are required to use the Coinbase Advanced trading platform and have an existing spot trading account with the exchange. The contracts are intentionally sized to cater to retail traders, offering units of 1/100th of a Bitcoin (BTC) and 1/10th of an Ethereum (ETH), which results in lower initial capital requirements and makes it a more viable investment option.
The worldwide crypto derivatives market represents roughly 75% of the total global crypto trading volume. Coinbase’s venture into this sector is poised to have significant ramifications for its revenue diversification, especially in light of the diminishing volumes in spot trading.
Compass Point Research and Trading analysts, along with Owen Lau from Oppenheimer & Co., have shared their positive outlook on the long-term advantages of this expansion. They believe it positions Coinbase to become a dominant futures provider within the US market.
This development unfolds as Coinbase is engaged in an ongoing legal dispute with the US SEC, which has accused the company of operating as an unregistered exchange, a claim that Coinbase is challenging. Before launching this service in the US, Coinbase had already made perpetual futures trading available to non-US institutional investors in May and to retail users outside the US in September.