Coinbase Derivatives To Launch Institutional Bitcoin Futures

By Kevin • June 4, 2023 2:04 pm • Comments

It was just revealed that Coinbase Derivatives Exchange will now offer institutions the ability to access Bitcoin tracked futures starting next week.

The futures contract for Bitcoin will have the ticket symbol BTI and is expected to greatly expand the amount of capital within crypto.

After all, institutions very often use derivatives in order to get exposure to a particular type of financial asset and this will also increase trading volume significantly.

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Investors have already been buying up all these micro futures for some time, but the game changes entirely once institutional investors get involved.

Coinbase has mentioned that these futures will be settled in USD and allows for traders to hedge their trades.

DeCrypto.co reports:

They will be settled in U.S. dollars monthly and institutional traders will be able to hedge market bets, express long-term market views, or utilize the products in complex trading strategies, Coinbase added.

“Introducing institutional-sized contracts marks another milestone in our ongoing mission to provide accessible and cutting-edge financial instruments to market participants and underscores our dedication to solutions tailored to the needs of institutional clients,” the announcement read.

It added that the futures contracts would “come with significantly lower fees than traditional offerings.”

The derivatives market in the crypto world is bigger than the spot market: according to CoinGecko, the total derivatives 24-hour volume currently stands at $139 billion, versus $36.2 billion for spot trading on centralized exchanges.

Coinbase did not always have a derivatives-based exchange, but that changed when it had acquired the derivatives exchange FairX and rebranded it as Coinbase Derivatives Exchange.

Investors and speculators are seeing this move by Coinbase as a way to diversify their operations in terms of the products that they offer.

Additionally, the exchange has been working on expanding overseas due to the current uncertain regulatory environment within the US.

This comes after the SEC gave a warning to the SEC and many expect that the SEC will take legal action against the company soon.

Coinbase, however, has been proactive about this and has already initiated legal action against the SEC before hand.

CoinTelegraph reports:

Coinbase’s decision to establish a derivatives exchange coincides with its ongoing efforts to address the need for regulatory clarity surrounding the trading of digital assets in the United States.

In response to Coinbase’s petition for a writ of mandamus, the U.S. Securities and Exchange Commission (SEC) communicated that the rulemaking process could potentially span several years, indicating that it is not under any time pressure to expedite the proceedings.

The commission made it clear that it intends to utilize enforcement actions to bring clarity regarding the regulation of crypto assets.

Nonetheless, the SEC emphasized that the public statements made by its chair Gary Gensler should not be interpreted as formal guidance or official policy statements issued by the commission.

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