Coinbase Financial Markets, Inc. secures approval to bring federally regulated crypto futures trading to eligible US customers
TL;DR:
Coinbase Financial Markets, Inc. has secured regulatory approval from the National Futures Association (NFA), a CFTC-designated self-regulatory organization, to operate a Futures Commission Merchant (FCM) and offer eligible US customers access to crypto futures.
This is a critical milestone that reaffirms our commitment to operate a regulated and compliant business and to provide the most trusted and secure crypto-native offerings.
Coinbase Financial Markets will now be the first crypto-native leader to offer access to regulated, leveraged and cash-settled crypto futures. Learn more about futures here.
This blog post was updated on August 17, 2023 to clarify the respective offerings of Coinbase Global, Inc. entities including Coinbase Financial Markets, Inc. and Coinbase Derivatives Exchange.
Customers will soon be able to directly access futures through Coinbase Financial Markets
Regulation and transparency are critical and build confidence for individual customers and institutions, and access to a CFTC-regulated crypto derivatives market is essential to unlocking significant growth and enabling broader participation in the cryptoeconomy. In September of 2021, Coinbase Financial Markets filed an application with the NFA to register as an 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 Financial Markets believes this is a watershed moment to be able to bring regulated crypto derivatives products to US customers. Where Coinbase Financial Markets and our affiliates believe regulations are clear and sensible, we will work with regulators to receive the authorizations needed to offer products that align with our purpose of using crypto to update the financial system to advance economic freedom and opportunity. We support this purpose by always seeking to build the most trusted and secure products and services.
Today, that approval has been secured, which will allow eligible US customers to access regulated derivatives products through Coinbase Financial Markets, subject to the oversight of the CFTC and the NFA. Coinbase Financial Markets believes that approval for US customers to access regulated crypto derivatives, which may risk loss, will allow more people to access the cryptoeconomy in the United States in a safe way that helps keep the US at the center of digital innovation.
Obtaining FCM approval for Coinbase Financial Markets was the next step in bringing transparent and secure derivatives markets to eligible customers so they can access regulated futures contracts. In the coming months, Coinbase Financial Markets will provide additional information on how verified US customers can access our futures offering.
To learn more about futures, click here.
An important milestone
The global crypto derivatives market represents ~75% of crypto trading volume worldwide and is a critical trader access point. The ability to trade using margin gives customers leverage and access to the crypto market with less upfront investment, which may risk loss. Being able to express long and short positions, investors also use derivatives to manage risk on their underlying crypto assets. Such product benefits are why Coinbase Global, Inc. acquired FairX in 2022, a CFTC-regulated futures exchange now known as the Coinbase Derivatives Exchange. Since then, Coinbase Derivatives Exchange has successfully launched nano Bitcoin and Ethereum futures contracts, sized for the retail investor, and on June 5, launched larger versions for the institutional market. The Coinbase Derivatives Exchange is open to third-party brokers, FCMs, and market makers. It has established a deep liquidity pool with $4.7bn BTC and $2.0bn ETH futures traded in notional volume so far in 2023.
Coinbase Global, Inc. chose to become a public company in the US because it believed the US would best be served by embracing the cryptoeconomy and would offer the regulatory framework with the highest standards in consumer protection.
---
Information provided is not investment advice. Futures accounts are maintained by Coinbase Financial Markets, a CFTC registered futures commission merchant and a member of the National Futures Association. Spot accounts are maintained by Coinbase Inc., which is not CFTC registered and is not a member of the National Futures Association. Access to the referenced financial products requires user eligibility, and may not be available in all jurisdictions. The risk of transacting in futures can be substantial and may not be suitable for everyone. Please review CFM Futures Risk Disclosure Statement for more information. Coinbase Financial Markets makes no representation on the suitability of information provided or to a particular financial product.
COINBASE FINANCIAL MARKETS IS A MEMBER OF NFA AND IS SUBJECT TO NFA'S REGULATORY OVERSIGHT AND EXAMINATIONS. HOWEVER, YOU SHOULD BE AWARE THAT NFA DOES NOT HAVE REGULATORY OVERSIGHT AUTHORITY OVER UNDERLYING OR SPOT VIRTUAL CURRENCY PRODUCTS OR TRANSACTIONS OR VIRTUAL CURRENCY EXCHANGES, CUSTODIANS OR MARKETS.
About Greg Tusar
Greg Tusar serves as VP, Institutional Product for Coinbase, leading the firm’s efforts in areas like Prime Brokerage and Custody, Financing, and Coinbase Exchange. Greg joined Coinbase when the company acquired Tagomi Systems, where he was co-founder and CTO. Before Tagomi, Greg was Head of Global Execution Services and Platforms at KCG Holdings, and spent 13 years at Goldman Sachs, most recently as a Partner and global head of the firm’s equities electronic trading business.
