The approval for America’s largest digital asset exchange, Coinbase, to offer crypto futures to U.S. retail customers is being seen as a major regulatory victory amid a heated battle with the country’s securities regulator.
On Aug. 16, the National Futures Association (NFA) — designated by the U.S. commodities regulator as a registered futures association — granted Coinbase permission to operate a Futures Commission Merchant (FCM) platform.
A loud signal
Some crypto industry commentators see the approval as a significant regulatory victory for Coinbase and crypto, given the U.S. Securities and Exchange Commission has accused the exchange of avoiding the registration of its offerings.
“If I were a judge I’d wonder why somehow [Coinbase] manages to register with the [CFTC] yet the [SEC] claims that Coinbase is unwilling to do the hard work to register,” investment management firm Electric Capital founder Avichal Garg wrote in an Aug. 17 tweet.
Getting an FCM via the @CFTC is a big deal. It takes years of work.
If I were a judge I’d wonder why somehow @coinbase manages to register with the @CFTC yet the @SECGov claims that Coinbase is unwilling to do the hard work to register. https://t.co/axDHt8ya3F
— Avichal – Electric ϟ Capital (@avichal) August 16, 2023
Former CFTC Commissioner and policy head at a16z, Brian Quintenz, said that “Customers and innovation can both win when a regulator is open to having a constructive dialogue around new technology.”
Meanwhile, Coinbase CEO Brian Armstrong said the approval was a major moment for crypto clarity in the United States.
The move has also placed Coinbase in a position normally helmed by traditional finance firms.
Institutional exchanges, the Chicago Mercantile Exchange, and the Chicago Board Options Exchange currently offer Bitcoin and Ether futures in the United States.
Coinbase labeled the move as a “critical milestone,” adding it makes it the first crypto-native company to directly offer traditional spot crypto trading alongside futures products.
Tapping into a massive market
In May, CoinGecko reported that the global crypto derivatives market was worth just under $3 trillion, while Coinbase highlighted that the global crypto derivatives market represents around three-quarters of all trading volumes.
“Since the global crypto derivatives market can be three to four times larger than spot, this approval increases…
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