Regulatory win for crypto in US: Coinbase receives green light for crypto futures trading

Coinbase Global, an American publicly traded company that operates a cryptocurrency exchange platform, has achieved a significant regulatory milestone by obtaining approval to introduce cryptocurrency futures trading for retail customers in the United States.

Coinbase has secured the green light from the National Futures Association (NFA), a self-regulatory body authorised by the Commodity Futures Trading Commission (CFTC), to provide Bitcoin and Ethereum futures trading directly to eligible US retail customers.

Previously, only institutional clients had access to these trading products. The approval has been followed by a positive response in the market, with Coinbase's shares surging by 3 percent to $81.55. Despite ongoing legal challenges, this move marks a substantial win for Coinbase, as it broadens its offerings to a wider market segment.

What was the company's response?

In light of the approval, Coinbase expressed its dedication to maintaining a compliant and regulated business environment. Previously, The Securities and Exchange Commission (SEC) filed a lawsuit in June 2023, accusing Coinbase of operating unlawfully due to its failure to register as an exchange. This legal battle has been ongoing, with Coinbase openly criticising the SEC for its approach.

Additionally, CEO Brian Armstrong has stated that the unfavourable regulatory environment could lead more US crypto businesses to go abroad and that SEC Chair Gary Gensler's enforcement-first strategy could hamper innovation in the sector. This was also during the time that Coinbase had announced that it was considering shifting its headquarters to the middle-east.

Future opportunities in a growing market

The approval granted by the NFA after nearly two years of application opens the door for Coinbase to tap into a relatively unexplored market segment. The global derivatives market constitutes a substantial portion of the overall cryptocurrency market, often contributing to market volatility through leveraged bets on futures and derivatives.

Research firm CCData reported that the global trading volume for crypto derivatives reached approximately $1.85 trillion in July 2023. Such derivatives play a pivotal role in shaping market dynamics, contributing to both opportunity and volatility.

Coinbase's approval to introduce cryptocurrency futures trading to retail customers signifies a significant regulatory achievement amid ongoing legal challenges. This step could pave the way for increased engagement in the cryptocurrency derivatives market, an area that significantly influences the overall cryptocurrency landscape.