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Coinbase, the leading cryptocurrency exchange in the United States, has achieved a significant regulatory milestone by gaining approval from the National Futures Association (NFA) to introduce cryptocurrency futures trading to its eligible US clients. This approval positions Coinbase as the first regulated entity in the US to provide both spot trading and futures derivatives within the crypto space.
The NFA regulatory green light allows Coinbase to offer futures contracts for major cryptocurrencies like Bitcoin and Ether. This is limited to its U.S. customer base. This move marks a crucial step towards greater regulatory clarity for the cryptocurrency sector in the United States. The approval comes after Coinbase's multi-year journey. This began with its application in September 2021 to become a registered Futures Commission Merchant (FCM).
Brian Armstrong, CEO and co-founder of Coinbase, expressed his enthusiasm. He stated "This has been a multi-year process toward approval. We're excited to finally be launching federally regulated crypto derivatives with margin to our U.S. customers."
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Coinbase's expansion into cryptocurrency derivatives was bolstered by its acquisition of FairX, a CFTC-regulated exchange, in 2022. This acquisition enabled Coinbase to introduce derivatives products. These include futures contracts tailored for retail traders and larger contracts catering to institutional investors. In addition to futures contracts, Coinbase launched its international exchange offering perpetual swaps, a derivative similar to a futures contract, further enhancing its derivatives portfolio.
This strategic move by Coinbase, with the introduction of cryptocurrency futures trading, will contribute to enhancing the accessibility of crypto to a wider range of investors. At Lab51, we see this as an important event for the overall growth of the cryptocurrency market worldwide.