Bitcoin, Ethereum Futures To Launch On Coinbase Derivatives Exchange

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Coinbase exchange has revealed plans to launch institutional futures contracts for Bitcoin (BTC) and Ethereum (ETH). This will be done via its derivatives exchange on June 5. The report follows a June 1 blog post with the US-based exchange saying the products are meant to cater to increased institutional demand.

🏦 Coinbase will launch its derivatives exchange on June 5 and will initially offer Bitcoin and Ethereum futures contracts.

— CRYPTOBS (@Cryptobs_) June 2, 2023

Notably, Coinbase Derivatives Exchange is the regulated futures offering by crypto exchange Coinbase. It operates under the United States Commodities Futures Commission (CFTC) radar.

Coinbase Derivatives Exchange Set To Launch Institutional Bitcoin And Ether Futures

The decision comes after the derivatives exchange introduced the nano Bitcoin and nano Ether contracts. This happened last year. These contracts have since recorded massive institutional interest and demand for advanced derivatives products.

The new institutional-sized contracts ae settled in US Dollars (USD) monthly. The structure is such that institutional participants enjoy maximum precision. This applies to when they manage cryptocurrency exposure, hedge market bets, and express their directional opinions. It also applies to when tracking BTC and ETH returns in a capital-efficient manner. For the intelligent reader, they will help participants during complex trading strategies.

The new contracts, dubbed BTI and ETI futures, are measured at 1 Bitcoin and 10 Ether for every contract, respectively. They aim to let participants define their exposure to these growing digital asset commodities with granularity. Based on the report, doing so makes it possible for traders to take advantage of opportunities in a highly dynamic market environment when they present.

Besides risk management and enhanced precision, institutional-sized contracts also have remarkably lower fees compared to traditional offerings. This is specifically to enable institutions to maximize their capital efficiency. It also helps them reduce trading costs and, in the process, fosters an enhanced level of accessibility and participation within the cryptocurrency ecosystem.

Committment To Supporting Institutional Clients

Coinbase is focused on delivering as much support to institutional clients as possible. Among the moves the exchange has taken toward the endeavor is collaborating with Futures Commission Merchants (FCMs), brokers, and front-end providers. The partnership enables seamless access to the Bitcoin and Ethereum futures contracts as enabled by the strong and reliable trading platforms.

Based on current rates, BTI and ETI are worth $30,000 and $20,000 in notional value, respectively, which in retrospect, are “significantly lower fees” compared to traditional offerings.

While most of them are unregulated, cryptocurrency derivatives markets are a very popular market. Evidence of this can be found in data from CoinGecko, showing that it commands more than $134 billion in notional volume traded across exchanges. BTC and ETH-tracked products account for more than $25 billion of these volumes.

Coinbase On Expansion

Earlier, the largest crypto exchange in the United States declared its intention to establish a derivatives exchange in Bermuda as part of its international expansion plan. Coinbase also articulated that the exchange would initially allow traders to bet on BTC and ETH prices through perpetual futures contracts with 5X leverage. The remaining trades would be settled in the Circle’s stablecoin, USD Coin (USDC).

These highly ambitious moves come at a time when crypto exchanges are within the hawkish scope of regulatory bodies in the US. For their own safety and legitimacy, the exchanges are actively pushing for regulatory clarity around digital assets trading in the country. In response to Coinbase’s petition for a ‘writ of mandamus,’ the Securities and Exchange Commission (SEC) said the decision could take years as they were not in a hurry.

Further, the agency revealed plans to leverage enforcement actions in an effort to provide clarity around the crypto assets. Nevertheless, the federal regulator highlighted that Fed Chair Gary Gensler’s public assertions did not meet the “formal guidance” threshold, adding that neither did the policy statements from the commission.

1/ Here’s the tl;dr:
The SEC’s Investor Advisory Committee supports SEC Chair Gary Gensler’s plan to regulate crypto firms under existing securities laws, but requests formal industry guidance on how to meet the regulator’s expectations.

— The Law Drop (@TheLawDrop) April 12, 2023

This indicates that the exchange, famous for being the largest in the country, will be unleashing more cryptocurrency-related products across the globe while fighting for clarity in its own nation. In the words of Jesus in Mark 6:4 in the Bible, “A prophet is never accepted in his own hometown.”