Coinbase announced on March 10 that it will offer 24/7 trading for Bitcoin (BTC) and Ether (ETH) futures to US residents. The initiative includes perpetual futures trading with long-dated expirations, a feature set to redefine the US crypto derivatives market.
Expanding the US Crypto Derivatives Market
Currently, much of the crypto derivatives trading volume occurs outside the US, with American traders facing restrictions like fixed trading hours and expiring contracts. Coinbase aims to bridge this gap by providing continuous access to futures trading, eliminating inefficiencies and enhancing market participation.
Futures contracts allow traders to buy or sell an asset at a predetermined price and date. However, perpetual futures—commonly known as “perpetuals”—do not have an expiration date, offering flexibility to traders looking to maintain open positions indefinitely.
Regulatory Hurdles and Compliance
The US regulatory landscape for perpetual futures remains uncertain, prompting many exchanges to prohibit American traders from engaging in such products. Coinbase is working closely with the Commodity Futures Trading Commission (CFTC) to ensure compliance and regulatory clarity. The CFTC oversees commodity-based derivatives trading to safeguard market integrity.
The demand for crypto derivatives is evident, with the sector recording a staggering $1.3 trillion in monthly trading volume as of September 2023, according to Alpha Point. This figure far exceeds spot market trading, indicating a significant market appetite for derivative products.
Coinbase Faces Stiff Competition
Despite its innovation, Coinbase will face competition from industry giants. CME Group, a leading US derivatives exchange, reported a revenue of $6.1 billion in 2024, with crypto derivatives averaging a daily trading volume of $10 billion. However, CME’s offerings are limited to six-day trading weeks, giving Coinbase a competitive edge with its 24/7 accessibility.
Additionally, Robinhood is also eyeing the crypto derivatives space, having announced plans in January to launch Bitcoin and Ether futures. Coinbase already provides crypto derivatives trading through its subsidiary, Coinbase Financial Markets, positioning itself as a strong contender in the evolving landscape.
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As regulatory frameworks solidify, Coinbase’s move to offer around-the-clock trading could redefine crypto derivatives trading in the US, enhancing liquidity and market participation for traders nationwide.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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