Coinbase Financial Markets Inc. has made headlines by securing regulatory endorsement from the National Futures Association (NFA) to function as a Futures Commission Merchant (FCM). This allows Coinbase to grant eligible US customers access to crypto futures from their platforms.

Coinbase and Regulatory Commitment

Coinbase’s approval efforts began in September 2021 when Coinbase applied for FCM status with the NFA. Throughout the process, Coinbase's team collaborated closely with regulatory bodies to ensure full compliance with all mandates. 

The company's public status in the U.S. reaffirms its faith in the U.S. as a prime destination for the crypto economy, combining innovation with high consumer protection standards.

Market Implications and Growth Potential

It's crucial to recognize the vastness of the global crypto derivatives market, accounting for roughly 75% of the global crypto trading volume. This significant share highlights the importance of enabling consumers to engage in the crypto market with lesser initial investments than traditional trading methods.

Last year, Coinbase acquired FairX, a CFTC-regulated futures exchange currently known as the Coinbase Derivatives Exchange. This exchange has already launched nano Bitcoin and Ethereum futures contracts tailored for retail investors, and recently, more extensive versions aimed at institutional investors.The endorsement from the NFA sets the stage for introducing these regulated futures contracts to Coinbase's extensive customer base.

Coinbase Versus SEC: A Strained Relationship

Interestingly, while Coinbase celebrates this new FCM status, tensions with the U.S. Securities and Exchange Commission (SEC) persist. The SEC previously targeted Coinbase, prompting debates on its very existence as an exchange.

Despite these challenges, the Commodity Futures Trading Commission (CFTC) granting Coinbase the rights to manage bitcoin and ether futures strengthens the argument that ether should be classified as a commodity, potentially easing its US regulatory journey.

SEC Versus CFTC: Divergent Paths?

There's an undeniable difference in the approaches of the SEC and CFTC towards the crypto industry. While the SEC adopts a more confrontational stance, the CFTC seems more open to integrating major crypto players into the regulatory landscape.

What Lies Ahead?

Coinbase's efforts will likely encourage others to enter the regulated crypto space.

Coinbase's journey has showcased the balance of innovation with regulatory compliance, setting an example for the entire industry. It remains to be seen how this development will shape the crypto economy's future. 

One thing is clear: the tides are turning in favor of broader crypto acceptance.

Sources:

Coinbase

CoinDesk