Coinbase Secures SEC Approval for Crypto Futures Trading

Updated: 21 August 2023

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Coinbase has received approval from a US regulator to provide cryptocurrency futures to retail traders in the United States. The approval marks a major regulatory win for the exchange despite currently being entangled in a lawsuit filed by the US Securities and Exchange Commission (SEC).

Coinbase Gets SEC Approval for Crypto Futures Trading

This approval allows Coinbase to provide a wide range of services to US traders, including providing Bitcoin and Ether futures to eligible customers in the US. Before this move, only institutional clients at the exchange could deliver these products.

The exchange shares climbed slightly after the news before dropping on Friday by around 3% following a drastic drop in cryptocurrency prices.

The approval secured by the US-based exchange was granted by the National Futures Association (NFA), a self-regulatory entity constituted by the Commodity Futures Trading Commission (CFTC).

The company said the move was a significant milestone that affirmed its commitment to offering regulated and compliant services.

Nevertheless, the exchange is still facing challenges getting regulatory clarity in the US, with the SEC remaining adamant that most crypto assets offered in the country are securities.

In September of 2021, Coinbase Financial Markets filed an application with the NFA to register as an FCM. Our team has worked with regulators since then to ensure we will comply with all the necessary regulations and that our FCM’s business model meets the CFTC’s customer protection requirements.

Coinbase Conflict with the SEC

While the recent approval will expand Coinbase’s offerings in the cryptocurrency space, the lawsuit filed by the SEC remains a concern. In June this year, the SEC charged Coinbase with offering unregistered securities on the platform.

The regulator also said Coinbase failed to register its crypto asset staking-as-a-service program.

The SEC claimed that Coinbase had generated billions of dollars by unlawfully enabling the trading of crypto asset securities.

According to the regulatory body, the commission combined the traditional services of exchange, brokerage platform, and clearing agency without registering these services.

The exchange has since criticized this lawsuit. Coinbase filed a motion in response to the SEC’s charges asking a judge to dismiss the case against it.

The exchange also alleged that the SEC had stepped out of its regulatory jurisdiction by suing the company, which meant the regulator’s authority spilled over to the cryptocurrency industry.

Coinbase also asked the judge to dismiss the lawsuit because the allegations were similar to those made in the lawsuit against Ripple’s XRP.

A judge dismissed the SEC’s claims of XRP being a lawsuit saying that the trades made on exchanges were not considered securities. The SEC has since appealed this ruling.

Besides Coinbase, the SEC sued Binance US for offering unregistered securities and misleading customers.

The lawsuits have significantly impacted the cryptocurrency industry, with Robinhood delisting some securities classified as securities by the SEC, including Solana and Cardano.