The National Futures Association (NFA), a self-regulatory organization designated by the Commodity Futures Trading Commission (CFTC), has granted regulatory approval to Coinbase Financial Markets, Inc.
This approval allows Coinbase to operate as a registered Futures Commission Merchant (FCM) and offer eligible customers in the United States access to crypto futures contracts for Bitcoin (BTC) and Ethereum (ETH).
Coinbase requested permission from the NFA in September 2021 to become a Futures Commission Merchant (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 says that the announcement marks a significant milestone in the effort to bring federal regulatory oversight to the cryptocurrency markets. The move is aimed at enhancing consumer protection and ensuring that the United States remains a hub for digital innovation in the financial sector.
Furthermore, it notes that with this approval, Coinbase becomes the first crypto-native platform to offer both traditional spot crypto trading and regulated leveraged crypto futures trading in an integrated solution.
This move is expected to provide Coinbase customers with a seamless experience in accessing crypto futures through Coinbase Financial Markets.
“Approval for US customers to access regulated crypto derivatives will allow more people to access the crypto economy in the United States in a safe way that helps keep the US at the center of digital innovation,” Coinbase said.
Global Crypto derivatives market
Furthermore, it noted that the global crypto derivatives market accounts for about 75% of overall crypto trading volume and is a vital avenue for traders. Trading with margin provides leverage and easier access to crypto markets compared to traditional spot trading. Derivatives also allow investors to manage risk by taking both long and short positions on crypto assets.
“Such product benefits are why we acquired FairX in 2022, a CFTC-regulated futures exchange now known as the Coinbase Derivatives Exchange.”
It added that the exchange successfully launched more compact Bitcoin and Ethereum futures contracts specifically designed for individual investors. Furthermore, on June 5th, it introduced expanded versions of these contracts aimed at institutional participants.