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- The CFTC will allow Coinbase to offer US customers access to offshore cryptocurrency futures through the exchange’s subsidiary Deribit.
- Cryptocurrency “perps” are high-risk, leveraged bets on token prices with no expiration date.
- This move is expected to pave the way for other US exchanges to offer similar products.
The Commodity Futures Trading Commission (CFTC) gave Coinbase the green light to offer cryptocurrency futures on Friday, paving the way for the US exchange to soon begin connecting its clients to the lucrative, high-risk offshore market.
Coinbase is now actually allowed to provide its customers with access to the global cryptocurrency futures market through Deribit, the offshore cryptocurrency options exchange that was acquired by Coinbase. $2.9 billion last year. Perpetual futures contracts are derivative contracts that do not have an expiration date, which allow traders to place highly leveraged bets on the future price of cryptocurrency assets with borrowed capital.
A source familiar with the matter said Decryption Coinbase has not yet identified which crypto assets it plans to enable perpetual futures trading. The CFTC has paved the way for the company to offer all perpetual futures contracts for “digital commodities” traded on Deribit – a category that includes token markets including Bitcoin, Ethereum, Solana, Dogecoinand Trump Meme coin, among others.
Coinbase will decide which of these assets are “fit for purpose” and “the right type of asset” to offer to US customers in the form of perpetual futures contracts, the source said.
Proper bets on perpetual futures can earn a trader several times his initial investment. But losing bets can be quickly liquidated or forcibly closed by exchanges, causing a devastating ripple effect. Last fall, the rapid fluctuations in cryptocurrency prices ended in one afternoon $19 billion Cryptocurrency trades value in a matter of minutes, mainly due to the extent of leverage.
The Commodity Futures Trading Commission (CFTC) has indicated this More than a year It plans to bring cryptocurrency futures, also known as “perps,” to the United States. Although the cryptocurrency market is risky, it is incredibly profitable. Last month alone saw over $588 billion in cryptocurrency trading volume, according to Davey’s call. In contrast, the entire decentralized finance (DeFi) ecosystem saw trading volume worth just $160 billion in the same period.
On Thursday, Coinbase sent a letter to the CFTC asking the regulator to issue a no-action letter — a guarantee that it will not file a lawsuit, if Coinbase begins giving customers access to offshore cryptocurrency offenders. Less than 24 hours later, the CFTC responded with a detailed 16-page document outlining a new policy allowing the requested activities from Coinbase.
In addition to giving Coinbase the ability to offer offshore crypto operations on its local exchange, the Commodity Futures Trading Commission (CFTC) on Friday also gave Calcchi a prediction market. Green light To create its own perpetual Bitcoin futures contracts in the United States, the first American-born product of its kind.
Although Coinbase is the first US cryptocurrency exchange to get the green light to offer US customers access to the global cryptocurrency market, other exchanges are all but guaranteed to follow suit immediately, deferring to the guidelines set out in the CFTC’s no-action letter.
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