Coinbase Files For Futures and Derivatives Trading

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In Brief
  • Coinbase takes first steps to offer derivatives.

  • Battle with the SEC over Lend product still ongoing.

  • ETF filings with the SEC are mounting up.

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North America’s largest crypto exchange Coinbase has taken the first steps in making an application to allow futures and derivatives products on the platform.

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On Sept 16, Coinbase stated that it had filed an application with the National Futures Association (NFA) to register as a Futures Commission Merchant (FCM).

The exchange added that “this is the next step to broaden our offerings and offer futures and derivatives trading on our platforms,” in order to further expand the crypto economy.

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The NFA’s official website now lists Coinbase Global Inc. membership application as pending. Should this be approved, the company would need to register with the Commodity Futures Trading Commission (CFTC). Further to that, Coinbase would then need to file an application for a specific product or fund with the Securities and Exchange Commission.

The NFA is a self-regulatory organization for the U.S. derivatives industry, which has been designated by the CFTC as a registered futures association. An FCM is defined as an organization involved in the acceptance of buy or sell orders for futures or options in exchange for payment of money or other assets from clients.

The ongoing battle

Coinbase is currently embroiled in an ongoing battle with the SEC over its Lend product which offers a 4% annual return on USDC deposits for U.S. customers. The financial regulator took umbrage at the product, claiming that it violates securities laws.

On Sept 8, Coinbase CEO Brian Armstrong took to Twitter questioning the lack of regulatory clarity and asking why the regulator has threatened to sue it when other platforms are already offering yields on stablecoins.

Entrepreneur and billionaire investor, Mark Cuban, urged Coinbase to “go on the offensive” with the SEC and take the fight to them to prevent further stifling of innovation in the crypto industry.

On Sept 13, BeInCrypto reported that Coinbase announced a $1.5 billion private fundraising initiative from the sale of senior notes or “junk bonds.”

SEC dragging its feet

The SEC has yet to approve any crypto-related exchange traded product (ETP) and the list of applications is piling up. More than 20 have already been submitted so far and yet the procrastination continues.

Earlier this month executives from Fidelity Investments held a private meeting with SEC regulators in which the firm laid out several reasons why an ETP should be approved.  

The SEC has postponed VanEck’s Bitcoin Trust application for the third time this year, rescheduling the decision date to Nov 14.

Yet more applications for ETFs flood in with two more from Bitwise and SkyBridge Capital filed this week.

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Martin has been covering the latest developments on cyber security and infotech for two decades. He has previous trading experience and has been actively covering the blockchain and crypto industry since 2017.

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