Eligible US traders can now access cryptocurrency futures through Coinbase Financial Markets. This recent launch, as disclosed in a blog post on Wednesday, follows Coinbase’s approval in August to function as a futures commission merchant (FCM) by the National Futures Association.
Futures contracts entail agreements to buy or sell assets at specific prices and predetermined future dates.
In a blog post on Wednesday, Coinbase Financial Markets CEO Andrew Sears explained, “Futures provide traders with the ability to hedge their risk, diversify their portfolios, trade with leverage, and speculate on the market’s direction, whether it be upward or downward.”
US traders can access these contracts through the Coinbase Advanced trading platform, and they need to have a spot trading account with the exchange.
Coinbase has designed these contracts with retail traders in mind, offering lower upfront capital requirements. As Sears mentioned, “Sized at 1/100th of a bitcoin and 1/10th of Ethereum, these contracts can be an affordable investment option for a broader range of retail customers.”
The global cryptocurrency derivatives market accounts for approximately 75% of the total cryptocurrency trading volume, according to Coinbase.
The Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange (CME) were the first to introduce bitcoin futures contracts in December 2017, followed by ether futures contracts on CME in February 2021.
CME ranks just behind Binance in terms of bitcoin futures open interest, according to Coinglass data.
Industry analysts have suggested that Coinbase’s push into US derivatives could benefit the company in the long term, providing additional revenue streams to offset declining spot trading volumes. Compass Point Research and Trading analysts noted that while immediate revenue gains from Coinbase’s derivatives offering are not expected due to low market liquidity and the recent launch, it has the potential to establish itself as the premier futures platform for both retail and institutional traders in the US over time.
Owen Lau, executive director at Oppenheimer & Co., stated that US derivatives, in conjunction with initiatives like international expansion and the layer-2 network Base, could gradually contribute additional revenue outside of spot trading for Coinbase.
This launch occurs amidst Coinbase’s ongoing legal battle with the US Securities and Exchange Commission, which sued the company in June for allegedly operating as an unregistered exchange—a claim that Coinbase has contested. Coinbase International Exchange had previously introduced perpetual futures trading in May for non-US institutional investors, extending access to retail users outside the US in September.