Coinbase Files with NFA to Become a Futures Commission Merchant (FCM)

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Since going public on the NASDAQ stock exchange, one of the largest cryptocurrency exchanges Coinbase is continuously trying to expand its product offerings. The recent news is that Coinbase is planning to jump into cryptocurrency derivatives.

On Thursday, September 16th, Coinbase official Twitter account announced that Coinbase has filed with the National Futures Association (NFA) to register itself as a Futures Commission Merchant (FCM). With this, Coinbase plans to expand its product offering by offering futures and derivatives trading on its platform. The announcement reads:

The NFA website shows that Coinbase submitted the application on Wednesday, September 15th, and under the of Coinbase Financial Markets Inc. Details about the application and planned offering are sparse but according to the NFA registration rules, each application for registration as an FCM or an IB also must be completed and filed in accordance with CFTC Regulation 1.10.

This means that if Coinbase becomes an approved futures commission merchant (FCM) member under the NFA, the firm will then need to register with U.S. derivatives regulator the Commodity Futures Trading Commission to go ahead with its planned offering.

If the exchange passes all the regulatory hurdles, Coinbase can offer futures and derivative trading on its platform, apart from currently available spot trading.

Despite the regulatory FUD, crypto derivatives have exploded in popularity in 2021. Most of the world’s other exchanges, such as Binance, OKEx, FTX, and even some U.S.-based companies like CME Group are offer these services, though most of them offer the products to non-US users.

According to CoinMarketCap, Binance occupies the top spot in the crypto derivatives market. Data from derivates tracker Skew shows that Binance has a daily futures trading volume of $17.64 billion. However, most of the US-based exchanges have from this fast-growing market due to regulatory uncertainty.

Coinbase will be hoping that its plans to launch crypto futures trading services will be implemented smoothly as the exchange is under the threat of legal action from the US SEC over a USD coin (USDC) lending product.

It seems that Coinbase is not afraid of introducing new products as the exchange has established a new unit called Unit 410 to work on new crypto initiatives. On Wednesday, September 15, Coinbase announced:


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