Coinbase has received critical regulatory permission, allowing the platform to give US-based investors with access to the crypto derivatives market.
On the news, the company’s stock soared 3% Wednesday morning.
Nearly two years after Coinbase submitted its application to register as a futures merchant, the application was approved by the National Futures Association, a self-regulatory organization certified by the Commodity Futures Trading Commission.
More than 75% of all cryptocurrency trades take place via derivatives, but until recently, such products were unavailable to American investors due in part to their complexity and high levels of risk. With the help of derivatives, traders may make speculations about price changes without actually holding the underlying asset, which in this case would be a cryptocurrency like bitcoin.
Faryar Shirzad, Coinbase’s chief policy officer, described this as a critical milestone for bringing government regulatory authority over the cryptocurrency markets. Coinbase will be able to provide regulated futures under the watchful eyes of the CFTC and NFA in a way that safeguards consumers and ensures that the US remains a hub for digital innovation.
The Securities and Exchange Commission sued Coinbase and its rival Binance in June, and Coinbase and other cryptocurrency companies have frequently warned that this hostile regulatory approach would drive crypto innovation and jobs overseas. Many see the CFTC as the more pro-crypto US agency as it oversees the derivatives sector.
According to Andrew Sears, CEO of Coinbase Financial Markets, providing US investors with access to safe and regulated crypto futures is essential to fostering growth and enabling wider involvement in the crypto economy.
