Coinbase enters the fray of crypto derivatives

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(Kitco News) – Leading U.S. cryptocurrency exchange Coinbase plans to expand into cryptocurrency derivatives trading.

The company has filed a request with the National Futures Association to become a futures trader under the Coinbase Financial Markets entity. Joe Nikolson, based on the record, will be the CEO.

Nikolson has been a FINRA registered broker with Coinbase since 2018. He is named as one of the top six of the new entity, a list that extends to Coinbase CEO Brian Armstrong.

As of September 15, Coinbase’s application to the NFA was on hold. The Commodity Futures Trading Commission (CFTC) has proven to be a more crypto-friendly regulator than the US SEC. The CFTC, under former president Christopher Giancarlo, did not prevent the approval of Bitcoin futures contracts back in 2017 while the SEC has yet to give the green light to a Bitcoin ETF.

Coinbase’s expansion into crypto derivatives has been well telegraphed. Earlier this year, the company purchased Skew, a crypto market analysis platform for professional investors specializing in spot and derivatives markets. Coinbase is already leading the cryptocurrency spot market, but has been sidelined from derivatives.

Coinbase enters a crowded marketplace. Rival exchanges, including Binance and Kraken, already provide access to cryptocurrency futures. Binance Bitcoin futures volume currently hovers at $ 14.5 billion, according to Distort the data, while open interest is $ 3.57 billion. Kraken, on the other hand, supports crypto futures trading apart from in the United States and some other jurisdictions with up to 50x leverage in the following pieces: Ethereum, Litecoin, Bitcoin Cash, Ripple and Bitcoin. CME, a pioneer in crypto futures, supports Bitcoin and Ethereum futures, having paved the way for institutional investors to enter the crypto markets.

Social media users have expressed interest in what the fee structure might look like, with some claiming that Coinbase’s fees are known to be “excruciatingly high.”

SEC kerfuffle

Coinbase enters the fray for cryptocurrency derivatives as it wrestles with the US SEC over a future lending platform. Coinbase wants to allow users to generate interest with cryptocurrency assets. The SEC has threatened to sue if the company goes ahead with its plans, after issuing a Wells notice to Coinbase.

Attorney James Filan, former federal prosecutor in the Connecticut District Attorney’s Office, told Kitco:

“I think SEC Chairman Gary Gensler is trying to control the entire cryptocurrency space and he is doing it through per-app regulation, which is never a good idea. While pursuing these enforcement measures, Gensler is also working with Congress to gain power and control. He wants through new legislation. He is also now using the media to try to create a narrative that everything the cryptocurrency space is out of control, which is an unfair and inaccurate characterization. ”

Coinbase’s Armstrong, meanwhile, is on the offensive.

“I think the message Brian Armstrong is trying to send is that Coinbase is ready to work with the SEC and give the SEC the opportunity to provide regulatory guidance, but in the absence of that, Coinbase appears ready to The problem, in my opinion, is that until Gensler gets what he wants from Congress, he’s also ready to continue to advocate, ”Filan said.

Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not a solicitation to effect an exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for any loss and / or damage resulting from the use of this publication.



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