Key Highlights
- Coinbase secured CFTC approval to provide US institutions access to global crypto derivatives.
- Institutional onboarding for Deribit options trading has already started.
- Coinbase said retail access to these products will be introduced in the future.
Coinbase Financial Markets Inc., the subsidiary of Coinbase Global Inc., has gotten an approval from the CFTC to serve as the first CFTC-regulated futures commission merchant (FCM) to enable access by US institutions to global crypto perpetual futures and options markets.
According to the official announcement, crypto derivatives like options and perps make up about 80% of total cryptocurrency trading volume, with the industry boasting an annual turnover in the trillions of dollars.
Until now, American clients had no regulated avenue through which they could gain access to these products, often resorting to offshore alternatives or opting out altogether.
As per the CFTC staff letter issued today, Coinbase Financial Markets can classify some perpetual contracts traded on its affiliate foreign board of trade, known as Deribit FZE, as foreign futures. Additionally, the CFTC staff letter contains a no-action position with regard to the company’s request.
Onboarding has already started
Coinbase further informed that institutional clients can start onboarding today with options on Deribit being live via Coinbase Financial Markets, having contracts and collateral types expanding with perpetual futures to follow. The firm advised existing Prime clients to contact an account representative to initiate onboarding.
Brian Armstrong, the co-founder and CEO of Coinbase, posted the announcement on X and noted, “Big day for our US-based traders and for Coinbase. Until now, US users have been locked out of around 80% of global crypto markets. But not anymore!”
He further noted that, “Coinbase is the first and only regulated platform able to connect US users to global crypto options and perpetual futures (including Deribit options with >$31B in OI).” He also thanked Chairman Selig and CFTC for making the event possible.
The retail availability is noted as “coming soon,” with no timeframe being provided. Retail availability will also depend on the fulfillment of certain requirements, including compliance with CFTC rules, client eligibility criteria, and risk disclosures.
Coinbase restores Direct Deposit function
In another development in the US market, Coinbase has restored the Direct Deposit function for its US customers. With Direct Deposit, customers are able to deposit some or all of their paychecks directly into their Coinbase account, where money can be automatically converted into cryptocurrencies or kept in USDC stablecoins.
Coinbase CEO Brian Armstrong posted about the service improvement, saying that customers can set up automatic investment in cryptocurrencies such as Bitcoin and Ethereum, lend money, or spend it using the Coinbase One Card and receive up to 4% return on their spending.
To make use of the Direct Deposit service, customers will need to provide account and routing information from the Coinbase app to their employer.
Market witnesses divided perspective
This development highlights the existing conflict between innovation and regulation in the U.S. crypto market environment. While the proponents see it as an important move towards the integration of crypto with conventional finance, critics note that greater accessibility to derivatives may exacerbate system-wide risk if left unattended.
In this respect, as the crypto market evolves further, the regulatory measures will play a role in shaping competitive strategies for leading exchanges to attract institutional dollars.
Also Read: SEC’s Paul Atkins Signals Big Pivot on Crypto, IPOs, and Disclosure
