Coinbase has won a crucial regulatory approval that will allow the platform to provide US-based investors access to the crypto derivatives market.
The company’s stock jumped 3% Wednesday morning on the news.
The approval comes from the National Futures Association, a self-regulatory body designated by the Commodity Futures Trading Commission, nearly two years after Coinbase applied to register as a futures merchant.
Crypto derivatives make up more than 75% of all global crypto trades, but such products had been off-limits for investors in the United States, in part because of their complexity and high levels of risk. Derivatives are financial instruments that allow traders to speculate on price movements without actually owning the underlying asset — which in this case would be a crypto token like bitcoin.
“This is a significant milestone for bringing federal regulatory oversight over the crypto markets,” said Faryar Shirzad, Coinbase’s chief policy officer. Under the supervision of the CFTC and NFA, Coinbase will be able to offer regulated futures in a manner that protects consumers and helps ensure that the US remains a center for digital innovation.”
Coinbase and other crypto firms have repeatedly warned that the hostile regulatory posture from the Securities and Exchange Commission, which sued Coinbase and its rival Binance in June, would push crypto innovation and jobs overseas. Many view the CFTC, which regulates the derivatives market, as the more crypto-friendly US regulator.
“Offering US investors access to secure and regulated crypto futures is key to unlocking growth and enabling broader participation in the cryptoeconomy,” said Andrew Sears, the CEO of Coinbase Financial Markets.
