Coinbase is gearing up to start crypto derivatives offering in the United States as the exchange has applied for a National Futures Association (NFA) membership, becoming a registered Futures Commission Merchant (FCM).
The San Francisco-headquartered exchange first revealed its move on Twitter, which can be confirmed from the registry of the US regulator.
“This is the next step to broaden our offerings and offer futures and derivatives trading on our platforms,” the exchange noted.
Today, Coinbase filed an application with the NFA to register as an FCM → Futures Commission Merchant.
This is the next step to broaden our offerings and offer futures and derivatives trading on our platforms.
👉 Goal: Further grow the cryptoeconomy.
— Coinbase (@coinbase) September 15, 2021
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According to the regulatory database, Coinbase has applied for the NFA membership on September 15 for its subsidiary Coinbase Financial Markets Inc., whose application is now pending.
Joseph Nikolson, who joined Coinbase in 2018, is the Chief Executive Officer of Coinbase Financial Markets. Nikolson himself has been a FINRA-registered broker for more than 20 years.
A Lucrative Market for Crypto Derivatives
The financial derivatives market in the United States is highly regulated and has kept major international crypto derivatives platforms away from the country. But, now many other crypto exchanges are realizing the potential of the US market and are already making moves to launch crypto derivatives products. Most recently, FTX.US acquired the US-regulated derivatives exchange, LedgerX.
However, becoming an NFA member is not enough to list derivatives products. In addition, Coinbase has to acquire a license from the Commodity Futures Trading Commission (CFTC), which oversees the US derivatives markets.
Meanwhile, Coinbase recently revealed that the US Securities and Exchange Commission has threatened to sue the exchange if it proceeds with its proposed launch of crypto yield services, which according to the regulator violates the local securities markets laws.