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Coinbase Prepares to Roll Out Crypto Futures Trading. But Not in US

2 mins
Updated by Geraint Price
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In Brief

  • Coinbase will launch crypto futures to non-US members of its Coinbase Advanced service through its new International Exchange.
  • The company wants its new futures products to advance global finance amid growing uncertainty regarding US crypto legislation.
  • Open interest in futures has been flat this week, signaling uncertainty as investors are uncertain of what's next for Bitcoin.
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Coinbase will roll out crypto perpetual futures trading to non-US customers from its international platform registered in Bermuda. Derivative products, which account for around 75% of all daily crypto trading volumes, amassed $5.5 billion in notional institutional trading volume on Coinbase in Q2.

Coinbase, a registered US public company, will roll out trading for non-US customers as part of its “Go Broad, Go Deep” strategy to set up business in overseas markets. It is part of a move to partner with “high bar global regulators to build a crypto regulatory framework that allows crypto technology to continually drive innovation.”

Coinbase Launches Futures While it Fights for Regulations

The exchange said that while it established its business in US because it believed the country would lead advances in finance, the latest move is intended to advance the global financial system. The futures contracts will be available to customers who meet the Coinbase Advanced eligibility criteria. 

Read more: What Are Bitcoin Futures?

Trading will commence in the coming weeks, the exchange said. 

Coinbase is locked in an existential legal battle with the US Securities and Exchange Commission (SEC) over charges it operated as an unregistered broker-dealer. The company’s CEO Brian Armstrong has criticized the US for its slow approach to crypto regulation compared with other G20 countries.

Open Interest and Positive Flows Decline for Crypto ETFs

The launch of Coinbase’s non-US futures business comes at a time of relative indifference in crypto futures markets. In the last week, open interest and basis, key indicators of investor sentiment, were flat on the CME, the world’s largest derivatives trading exchange.

Read more: 10 Best Crypto Futures Trading Platforms in 2023

Open interest (OI) is the number of futures contracts that are held by market participants at the end of a trading day. Increasing open interest is usually a confirmation of a trend, while falling open interest means that a trend is weakening.

OI in Bitcoin (BTC) futures on the CME fell to 78,755 BTC at the time of writing, after peaking at 83,350 on Sept. 19. The broader BTC perpetual futures market also saw a relatively quiet week, with open-interest fairly flat at 274,000 BTC.

Coinbase Futures non-US customers, CME Open Interest Futures
Open Interest CME | Source: K33 Research

The futures exchange-traded fund (ETF) market experienced its fifth consecutive week of outflows since last week, a trend that seems unlikely to reverse unless macro conditions change. Since July 13, in 42 out 50 trading days, ProShares’ crypto futures ETFs have recorded negative outflows.

However, despite the bearish outlook for futures-based ETFs, contributions from non-ETF-related futures products are near quarterly highs of 48%.

The SEC has fueled macro uncertainty by pushing back approval deadlines for more than seven ETFs that track the spot price of Bitcoin. An approval would cause companies to buy and hold the asset on behalf of clients, reducing its circulating supply and increasing its price.

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David Thomas
David Thomas graduated from the University of Kwa-Zulu Natal in Durban, South Africa, with an Honors degree in electronic engineering. He worked as an engineer for eight years, developing software for industrial processes at South African automation specialist Autotronix (Pty) Ltd., mining control systems for AngloGold Ashanti, and consumer products at Inhep Digital Security, a domestic security company wholly owned by Swedish conglomerate Assa Abloy. He has experience writing software in C,...