Last Wednesday, Coinbase announced that it had applied to become a registered futures commission merchant with the National Futures Association.
It indicates that the world's most valuable crypto exchange wants to invest its profits in derivatives trading instead of trading traditional assets for other assets, in which people can speculate on the future price.
Options and futures contracts are typical derivatives. Futures contracts allow individuals to have the ability to buy and sell Bitcoin or another cryptocurrency on a specific date in the future.
Selling it at a higher price will allow you to pocket the difference. The difference between options and futures contracts is that the former offer traders the option to buy or sell at a predetermined price. Perpetual contracts, which do not expire, are also popular.
Adding futures and derivatives trading to our platforms is the next step for Coinbase offerings to broaden.
The Commodity Futures Trading Commission regulates not only commodities but all derivative products in the U.S. A business selling to individuals must register with it. It is common for them to do so only after they are NFA members, which handle the registration on behalf of the agency.
Traditional financial markets and cryptocurrency markets are big on derivatives trading. Compared to its standard exchange, Binance's futures volume dwarfs that of its standard exchange three-to-one.
This disparity is even more pronounced on FTX, the global exchange that is making significant advertising efforts in the world's largest economy. (Where it also hopes to offer derivatives trading through a smaller American affiliate).
CoinGecko data shows that these competitors, as well as others, have created a crypto derivatives market that is almost $150 billion in size. Despite Coinbase being the dominant player in American spot exchanges, it has come to the conclusion it cannot continue ceding exotic territory to its competitors.