The US Commodity Futures Trading Commission (CFTC) has now opened the way for Coinbase and other CFTC-registered exchanges to provide regulated access to the global cryptocurrency derivatives markets.
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Coinbase provides access to global cryptocurrency derivatives
On Friday, Coinbase Announce Its subsidiary, Coinbase Financial Markets (CFM), has become the first US-regulated Futures Commission (FCM) dealer to provide its local clients with access to global cryptocurrency derivatives markets.
Coinbase explained that cryptocurrency derivatives account for approximately 80% of global cryptocurrency trading volume, with options, perpetual futures, and other instruments driving most of this activity across international venues.
However, US clients did not have regulated access to these trillions of dollars market yet. As a result, some institutional clients have had to establish offshore entities to access these markets and incur additional counterparty exposure and infrastructure costs.
“Today that changes. Guidance from the CFTC positions Coinbase Financial Markets as the first CFTC-regulated FCM to connect US customers to global cryptocurrency options and perpetual futures liquidity. US customers will finally have a fully regulated and compliant solution to access all major cryptocurrency markets,” the company stated.
According to the announcement, US customers can now access global cryptocurrencies perpetrators and futures options without third-party solutions through Coinbase Financial Markets, including access to Deribit, which holds more than $31 billion in Bitcoin (BTC) options with open interest.
Coinbase Financial Markets has opened up the onboarding process for institutional clients, providing direct access to Deribit options. Perpetual futures and additional collateral types are set to follow and wider customer access, including retail, is also on the horizon.
CFTC guidance opens the regulated path
This announcement comes after Friday statement From the CFTC confirming the classification of certain perpetual crypto assets as “foreign futures contracts,” as well as a no-action letter regarding FCM transfers of clients’ crypto assets to foreign brokers as margin.
The Market Participant Division (MPD) confirmed in its letter that the perpetual contracts described “may be classified as foreign futures contracts as defined in Commission Regulation 30.1.”
Additionally, the Section will not recommend that the Commission take enforcement action against CFM for “deploying customer-owned digital goods and payment stablecoins with CFM’s foreign brokerage firm to cover its foreign futures and foreign options positions on CFM’s Foreign Trade Board under circumstances where the foreign brokerage has obtained the right to reuse customer-owned assets.”
Coinbase and its CEO, Brian Armstrong, thanked the Commodity Futures Trading Commission (CFTC). president Michael Selig and the regulatory agency “recognize that U.S. customers deserve regulated access to these vital markets.”
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Meanwhile, the CFTC revealed that it had issued an order approving Calcci to list the BTCPERP contract, a perpetual contract that refers to the spot price of Bitcoin, as a futures contract, making it the company’s first product after event contracts.
Meanwhile, Selig Confirm Today’s action on onshore crypto assets “reflects the CFTC’s commitment to promoting responsible innovation while ensuring these new products are traded on regulated exchanges that uphold customer protection and market integrity.”
Featured image from Unsplash.com, chart from TradingView.com
