Approval of Coinbase futures viewed as a significant achievement in the ongoing battle against cryptocurrency

The authorization for Coinbase, the largest digital asset exchange in the United States, to provide crypto futures to retail customers is regarded as a significant regulatory achievement amid ongoing tensions with the nation’s securities regulator.

On August 16, the National Futures Association (NFA), recognized by the U.S. commodities regulator as a registered futures association, granted Coinbase the authority to function as a Futures Commission Merchant (FCM) platform.

A strong indication

Several commentators within the crypto sector view this approval as an important regulatory success for both Coinbase and the broader crypto landscape, especially considering that the U.S. Securities and Exchange Commission has accused the exchange of evading the registration of its offerings.

“If I were a judge, I’d question why [Coinbase] is able to register with the [CFTC] while the [SEC] asserts that Coinbase is reluctant to undertake the necessary steps to register,” wrote Avichal Garg, founder of investment management firm Electric Capital, in a tweet on August 17.

Obtaining an FCM through the @CFTC is significant. It requires years of effort.
If I were a judge, I’d question why @coinbase is able to register with the @CFTC while the @SECGov claims that Coinbase is unwilling to do the necessary work to register. https://t.co/axDHt8ya3F

— Avichal – Electric ϟ Capital (@avichal) August 16, 2023

Former CFTC Commissioner Brian Quintenz, who is now the policy head at crypto investment firm a16z, stated that “Customers and innovation can both benefit when a regulator is willing to engage in constructive dialogue regarding new technology.”

In the meantime, Coinbase CEO Brian Armstrong remarked that the approval marks a significant moment for clarity in the U.S. crypto landscape.

A response to Coinbase securing futures approval. Source: X/SMTuffy

This development has positioned Coinbase in a role typically occupied by traditional financial institutions.

Currently, two institutional exchanges, the Chicago Mercantile Exchange and the Chicago Board Options Exchange, provide Bitcoin and Ether futures in the United States.

Coinbase described this development as a “critical milestone,” noting that it becomes the first crypto-native firm to directly offer traditional spot crypto trading alongside futures products.

Accessing a vast market

In May, CoinGecko reported that the global crypto derivatives market was valued at just under $3 trillion, while Coinbase pointed out that this market accounts for approximately three-quarters of all trading volumes.

“As the global crypto derivatives market can be three to four times larger than spot, this approval expands Coinbase’s total addressable market,” wrote Dan Dolev, an analyst at Mizuho Securities, in a note dated August 16, as reported by Barron’s.

Jeff Sekinger of Orca Capital stated, “Coinbase is poised to become a crucial access point for traders,” adding that its new offerings will “address this demand and provide enhanced exposure and flexibility for investors.”

Meltem Demirors, Chief Strategy Officer at CoinShares, remarked that it is “an exciting time in U.S. crypto markets,” especially with a shift towards U.S. trading hours.

Related: Coinbase Derivatives Exchange set to roll out BTC and ETH futures

The firm initially announced plans to introduce BTC and ETH futures contracts in mid-2022. The new approval will enable Coinbase to offer crypto futures directly to eligible U.S. retail customers, rather than solely to institutional clients. However, the exchange did not indicate when these offerings would be available.

Coinbase’s stock (COIN) did not respond positively to the news, declining 1.56% on the day to $77.7 in after-hours trading; nonetheless, Coinbase shares have increased by 130% this year.

Cointelegraph has reached out to Coinbase for additional comments.

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