Coinbase Expands Offerings With New Bitcoin Futures Product

Key points to remember

  • Coinbase plans to launch its first crypto derivative product next week.
  • The so-called “Nano” Bitcoin (BIT) futures contract will initially begin trading through third-party brokers, not through Coinbase itself.
  • BIT contracts will be cash-settled and sized to one-hundredth of Bitcoin to be more suitable for retail traders.

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Coinbase has announced that it will launch its first derivative product, a cash-settled Bitcoin futures contract, on June 27.

Coinbase will launch the first derivative product

The Coinbase Derivatives Exchange – formerly the FairX Exchange, acquired by Coinbase in January this year – will launch its first listed crypto derivative product.

According to a Friday blog post, the so-called Bitcoin “Nano” futures contract will begin trading on June 27 under the symbol BIT. Each contract will be sized at one-hundredth of a bitcoin and settled in cash or, more specifically, US dollars.

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Interestingly, BIT contracts will initially only be available for trading through third-party brokers and clearing houses. Coinbase is currently awaiting approval from the Commodity Futures and Exchange Commission on its own futures commission agent (FCM) license in order to be able to offer margined futures contracts directly to its clients and customers.

“The crypto derivatives market is $3 billion* in volume globally and we believe that further product development and accessibility will unlock significant growth,” Coinbase Derivatives Exchange Head Boris Ilyevsky wrote in the post. of blogging. “It is more important than ever to bring the benefits of futures to a broader market so that all types of traders can access the regulated U.S. crypto derivatives markets to express their views or hedge their underfunded crypto assets. underlyings.”

Coinbase’s new Bitcoin futures product is specifically tailored to retail traders, offering less initial capital than traditional futures. This move is somewhat controversial given that in 2019 the UK Financial Conduct Authority banned the sale and marketing of crypto derivatives to retail traders nationwide. More recently, in May, the Dutch Authority for the Financial Markets (AFM) also expressed a similar sentiment, arguing that “trading in crypto derivatives should be limited to wholesale trading”. The AFM, however, has not yet been able to restrict crypto derivatives for retail sale in the country due to the lack of regulatory powers.

Coinbase’s expansion into derivatives comes on the heels of downsizing. Earlier in June, the company announced that it would lay off around 18% of its workforce to ensure it remains healthy during the current economic downturn. “We appear to be entering a recession after an economic boom lasting more than 10 years,” Coinbase CEO and co-founder Brian Armstrong said in a statement. blog post. He explained that a recession could lead to another “crypto winter,” depressed periods in the crypto market that have historically hurt the company’s trading earnings.

The new derivative, which will allow retail traders to hedge their Bitcoin positions during the current bear market, could be precisely what the largest crypto exchange in the United States needs to boost its trading income after the disappointing launch of its NFT Market last month.

Disclosure: At the time of writing this article, the author of this article owned ETH and several other cryptocurrencies.

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Coinbase Expands Offerings With New Bitcoin Futures Product


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