Coinbase Applies to Trade Crypto Futures In Derivatives Push

(Bloomberg) -- Coinbase Global Inc. is planning to jump into cryptocurrency derivatives.

The biggest U.S. cryptocurrency exchange filed an application with the National Futures Association on Wednesday to register as a futures commission merchant. The company is registering as Coinbase Financial Markets Inc., the filing showed.

Cryptocurrency futures and options have long been a glaring hole in Coinbase’s product portfolio, while Bitcoin derivatives have become a huge market. Most of the world’s other exchanges, such as Binance, OKEx, FTX and even some U.S.-based companies -- CME Group Inc. and Kraken -- offer them, though Kraken only offers the products to non-U.S. users. Market leader Binance had Bitcoin futures trading volume of $17.1 billion in the last 24 hours, according to tracker Skew. Many U.S. exchanges have stayed away from this fast-growing market due to regulatory uncertainty. 

Cboe Global Markets, Inc. was the first to list Bitcoin futures in the U.S. in 2017, then was outrun by CME Group Inc., whose products gained wider acceptance. Today, overseas exchanges have the lion’s share of this market. They typically attract derivatives traders by offering them up to 100-times leverage, which a highly regulated exchange like Coinbase is unlikely to do.

Coinbase is working to grow its stable of products to be less dependent on spot trading fees. Earlier this year, Coinbase bought Skew, which is best known for tracking the derivatives market.

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