Finance

Coinbase applies to join crypto futures market

Cryptocurrency exchange Coinbase has filed an application to be approved as a futures provider, as it seeks to join the crowded digital assets derivatives market.

Coinbase said it had applied for membership with the National Futures Association, a top self-regulatory body in the US, as a futures commission merchant on 15 September.

The move would mark Coinbase’s first entry into crypto derivatives, a lucrative market for exchanges. Many of Coinbase’s rivals already offer access to derivatives, including Kraken, Binance and CME Group.

“This is the next step to broaden our offerings and offer futures and derivatives trading on our platforms,” said Coinbase in a tweet. “Goal: Further grow the cryptoeconomy.”


Crypto derivatives are controversial because they are complex, high-risk products with volatile underlying assets, though they are one of the few areas of cryptocurrencies with strict regulatory oversight.

Retail investors in the UK were banned from trading crypto derivatives after the Financial Conduct Authority said in January that the underlying assets might prove too difficult for non-professional traders to value or fully understand.

READ The Fintech Files: How will the FCA’s crypto ban fare after the bitcoin boom?

Binance has found itself in hot water with regulators globally over its offering of derivatives among other regulated products, in some instances without appropriate authorisation.

Coinbase’s NFA application was filed by an entity called Coinbase Financial Markets, with registered broker Joseph Nikolson as its chief executive.

Coinbase hasn’t said yet whether it had also filed applications for permission to trade futures in US markets, with US markets regulator, the Commodity Futures Trading Commission.

Coinbase settled charges with the CTFC earlier this year and was issued a $6.5m fine after the watchdog said the exchange had delivered false, misleading, or inaccurate reports concerning digital assets transactions.

Other major US crypto exchanges have also made moves into derivatives in recent months, such as FTX.US with its acquisition of derivatives provider LedgerX.

READ Citigroup eyes bitcoin futures trading offer for clients

Futures products are popular among banks and traditional financial institutions seeking to access the cryptocurrency space. Citigroup is awaiting regulatory approval to begin trading CME bitcoin futures, a person familiar with the matter told Financial News last month, while Goldman Sachs’ cryptocurrency trading desk began focusing on crypto futures in May.

To contact the author of this story with feedback or news, email Emily Nicolle

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