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Coinbase’s Derivatives Strategy Includes Cash-Settled Futures for Dogecoin, Litecoin, and Bitcoin Cash
Coinbase, a leading cryptocurrency exchange, is preparing to introduce futures trading for several well-known cryptocurrencies, including the widely recognized meme coins Dogecoin (DOGE), Litecoin (LTC), and Bitcoin Cash (BCH).
Coinbase asserts that Dogecoin’s ongoing popularity demonstrates its progression beyond its meme origins, positioning it as a noteworthy entity within the cryptocurrency sector.
Coinbase Derivatives Plans to Introduce Cash-Settled Futures Contracts for Cryptocurrencies, Including Dogecoin
In communications sent to Commodity Futures Trading Commission (CFTC) Secretary Christopher Kirkpatrick on March 7, Coinbase Derivatives announced its intention to launch cash-settled futures contracts for Dogecoin, Litecoin, and Bitcoin Cash, potentially commencing on April 1. If approved, these contracts would enable traders to speculate on the future price fluctuations of these cryptocurrencies without the need to own them directly. The submission outlines specifics such as contract size, settlement methods, and overall framework.
Source: CFTC
Coinbase is reportedly utilizing a self-certification process described in CFTC Regulation 40.2(a) to offer these futures contracts. This approach permits them to list the contracts without explicit CFTC approval, provided they adhere to the existing regulations.
Coinbase’s initiatives in regulated futures trading within the US follow its acquisition of FairX, a CFTC-approved derivatives exchange, in 2022. This action, along with their August 2023 authorization for futures trading despite SEC scrutiny, indicates a strategic evolution.
At the time of the FairX acquisition, Coinbase conveyed its goal of enhancing the accessibility of the derivatives market for its millions of retail clients, reflecting a strategic emphasis on expanding its offerings and serving a wider array of investors.
Moreover, Coinbase justifies the inclusion of Dogecoin futures by highlighting its lasting popularity and engaged community, suggesting that the memecoin has matured into a more established cryptocurrency. Coinbase remarked,
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“Dogecoin’s enduring popularity and the active community support suggest that it has transcended its origins as a meme to become a staple of the cryptocurrency world.”
Following the announcement, Dogecoin, Litecoin, and Bitcoin Cash experienced notable price increases. As of the publication, DOGE saw a 16.1% rise, Bitcoin Cash (BCH) increased by 11.4%, and Litecoin (LTC) rose by 7.8%, exceeding the overall crypto market growth of 6.2% during the same period.
Coinbase’s Listing of Crypto Futures Contracts Triggers Speculation on Regulatory Strategies
Coinbase’s entry into futures contracts has generated considerable buzz within the crypto community, as this move could raise intriguing regulatory inquiries. Currently, the CFTC maintains its classification of Bitcoin and Ether as commodities, while the Securities and Exchange Commission (SEC) remains less clear, acknowledging all cryptocurrencies derived from Bitcoin as commodities.
The choice to list futures contracts for Dogecoin, Litecoin, and Bitcoin Cash has drawn attention from market analysts. Some speculate that Coinbase may be strategically influencing regulatory decisions, particularly by challenging the SEC regarding its position on crypto assets.
A recent post on X by Bloomberg exchange-traded fund analyst James Seyffart suggested that Coinbase’s futures filings might be a deliberate strategy to encourage the SEC to reassess its classification of cryptocurrencies utilizing the same proof-of-work consensus mechanism as Bitcoin as “securities.”
Seyffart wrote,
“Wonder if the SEC objects to these being classified ‘commodities futures’ vs ‘ securities futures.’ These [are all based on] Bitcoin so ‘these are securities’ claims would be hard to make after spot Bitcoin ETF approvals.”
The post Coinbase Derivatives Plans Cash-Settled Futures for Dogecoin, Litecoin, and Bitcoin Cash first appeared on Cryptonews.
