Coinbase to soon offer crypto futures and derivatives
Coinbase, one of the world’s biggest and most regulated crypto exchanges that went public earlier this year, will soon offer futures and derivatives trading as it looks to bump up its overall product offering.
“Today, Coinbase filed an application with the NFA to register as an FCM ? Futures Commission Merchant. This is the next step to broaden our offerings and offer futures and derivatives trading on our platforms,” the exchange stated in a tweet.
It added, “Goal: Further grow the cryptoeconomy.”
Today, Coinbase filed an application with the NFA to register as an FCM ? Futures Commission Merchant.
This is the next step to broaden our offerings and offer futures and derivatives trading on our platforms.
Goal: Further grow the cryptoeconomy.
— Coinbase (@coinbase) September 15, 2021
Why does Coinbase want futures?
Futures and derivatives are financial market products that allow investors to bet on asset prices without holding the actual underlying asset. Such products allow traders to hedge against their held physical assets, or simply make markets for ‘price discovery’ of those assets.
Crypto futures are a multibillion-dollar game. Nearly $4.8 billion worth of Bitcoin futures traded in the past day alone, with tens of billions of dollars worth traded across altcoin futures.
As a spot-only exchange, Coinbase made $1.8 billion in Q1 of this year. But demand for futures makes for a lucrative market, and Coinbase wants a piece of that: Exchanges earn each time an asset trades on their platform (via spreads, premiums, or market-making)—allowing for potentially billions of dollars in additional revenue each year.
Meanwhile, the development comes a day after Coinbase raised $2 billion in a debt offering. The exchange saw over $7 billion in orders pour for just $1.5 billion of debt on offer earlier this week, with institutional bank Goldman Sachs managing the sale of the debt notes.
As such, Coinbase is said to be building other parallels to expand its business offerings, such as DeFi tools and similar products.
It did, however, receive a rap from the US Securities and Exchange Commission (SEC) last week for its intention to offer crypto lending products. But the exchange doesn’t seem to be slowing down.
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