Coinbase Granted Approval to Allow Crypto Futures Trading

Facts

• Despite its ongoing legal battles with the US Securities and Exchange Commission (SEC), Coinbase Global announced Wednesday that it has received regulatory approval from the National Futures Association to offer cryptocurrency futures to US customers.¹
• Coinbase, which first applied to operate as such in 2021, can now allow eligible US customers to access regulated derivative products through Coinbase Financial Markets, which is regulated by the Commodity Futures Trading Commission (CFTC) and the Association.²
• Coinbase is the US’ largest cryptocurrency exchange and went public two years ago. Last year, it bought CFTC-regulated futures exchange FairX — now called Coinbase Derivatives Exchange — and has enabled bitcoin and ether futures trading for institutional investors.³
• Coinbase’s website says that futures trading — derivative contracts to buy or sell an asset at a later date for a previously agreed-upon price — is coming soon to the US and invites customers to sign up for its waitlist. The news spurred a 5% increase in Coinbase shares before the market opened Wednesday.⁴
• Coinbase is the first strictly cryptocurrency exchange to offer futures products, but bitcoin and ether futures have been available on the Chicago Mercantile Exchange and Chicago Board Options Exchange Digital.⁵
• Coinbase lauded the Association's decision as a "significant milestone" for regulatory oversight in the crypto industry. Meanwhile, the company is one of several large crypto exchanges being sued by the SEC for selling assets deemed to be unregistered securities.⁶

Sources: ¹Reuters, ²ABC News, ³Yahoo Finance, ⁴Associated Press, ⁵Investopedia, and ⁶Decrypt.

Narratives

• Narrative A, as provided by CoinTelegraph. Coinbase is winning its regulatory battle against the SEC's efforts to overstep its bounds. The SEC doesn’t have the jurisdiction to oversee and regulate the entire cryptocurrency industry, and it can't just declare any asset as a security. Regulation is extremely important for the still-young and ever-evolving crypto space, and the SEC cannot overstep Congress and other agencies as the chief regulator. The National Futures Association has recognized this, and soon others will follow.
• Narrative B, as provided by CoinGeek. Despite all the whining from the crypto community about SEC regulation and lawsuits, there has yet to be a satisfactory answer to the main question that must be answered: how are crypto assets anything but securities? When analyzing Coinbase’s business, it functions just as any other securities exchange — allowing customers to trade financial assets, now including futures, to earn a profit. Crypto assets are securities, and the SEC has the authority to regulate crypto exchanges like Coinbase.

Predictions