- Coinbase, the largest cryptocurrency exchange in the US, has received regulatory approval from the National Futures Association (NFA) and has been granted the authority to operate as a Futures Commission Merchant (FCM).
- According to Coinbase’s announcement, this approval makes Coinbase the first cryptocurrency platform to offer regulated and leveraged crypto futures trading in addition to traditional spot trading.
- Since applying to the NFA in September 2021, Coinbase has been working to meet the strict customer protection requirements of the Commodity Futures Trading Commission (CFTC) and demonstrate a solid business model.
Coinbase, the largest cryptocurrency exchange in the US, has obtained FCM approval from the US Commodity Futures Trading Commission.
Coinbase Achieves FCM Approval in the US
Coinbase, the largest cryptocurrency exchange in the US, has received regulatory approval from the National Futures Association (NFA), a self-regulatory organization designated by the US Commodity Futures Trading Commission (CFTC), and has been granted the authority to operate as a Futures Commission Merchant (FCM).
#Coinbase has obtained FCM approval to bring regulated #crypto futures to eligible US customers.
— COINOTAG (@coinotag) August 16, 2023
This grants the platform the authority to offer regulated crypto futures products to eligible US customers and represents a significant milestone in the evolution of crypto regulation in the country. According to Coinbase’s announcement, this approval makes Coinbase the first cryptocurrency platform to offer regulated and leveraged crypto futures trading in addition to traditional spot trading.
Following this development, Coinbase’s stock, COIN, rose over 5% in pre-market trading, reaching as high as $83.36. Yesterday, COIN shares closed at a price of $79.18. The company’s shares have experienced a decline of over 27% since reaching a peak of $114 on July 14 (the highest level seen since August 2022).
According to Coinbase’s statement, this approval is part of their efforts to promote regulation and transparency in the crypto industry – elements they believe are vital for individual and institutional trust. By providing access to the CFTC-regulated crypto derivatives market, Coinbase aims to encourage significant growth and enable broader participation in Web3.
Since applying to the NFA in September 2021, Coinbase has been working to meet the strict customer protection requirements of the CFTC and demonstrate a solid business model. The company argues that the US provides a regulatory framework that prioritizes high standards for consumer protection through the “adoption of the crypto economy.”
This approval could be a turning point in offering regulated crypto products to US customers. Coinbase advocates for “clear, sensible regulations” and is committed to working with authorities to obtain product approvals.
Coinbase’s Move Could Change the Game
This news could also impact the global crypto derivatives market, representing approximately 75% of the worldwide crypto trading volume. The benefits of derivatives, such as the ability to engage in leveraged trading, express long and short positions, and manage risk on underlying assets, have increased the popularity of the crypto derivatives market.
As the dynamics of the crypto market continue to evolve under the influence of various industry players, this milestone for Coinbase establishes a critical precedence for the role of regulatory compliance in advancing broader adoption of crypto trading.
Additionally, Coinbase’s potential role in securing the first spot Bitcoin ETF could be somewhat legitimized with this CFTC approval. The company has been listed as a surveillance sharing partner in some spot Bitcoin ETF applications made in 2023.
