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Coinbase Secures Regulatory Approval For Retail Perpetual Futures Trading

  • September 29, 2023

Coinbase, the renowned cryptocurrency trading platform, has announced that its Bermuda-based entity, Coinbase International Exchange, has received regulatory approval from the Bermuda Monetary Authority (BAM) to offer perpetual futures to retail customers outside the United States. 

The move marks Coinbase’s entry into the rapidly growing market for perpetual futures, which have become dominant in cryptocurrency trading abroad. 

According to Barron’s report, this development not only positions the US-based exchange as a direct competitor to Binance, the current leader in the crypto perpetual-futures market, but also signifies the platform’s expansion strategy and commitment to providing a comprehensive range of services to its global user base.

Coinbase Expands Reach Into Lucrative Crypto Market

Perpetual futures are derivative financial instruments enabling investors to make leveraged bets on cryptocurrencies without expiration. Unlike traditional futures contracts, perpetual closely track the underlying asset’s price. 

These instruments have gained significant popularity among retail investors due to their ability to facilitate leveraged trading with lower upfront capital requirements.

Coinbase launched its international exchange in May, targeting institutional investors outside the United States, and subsequently introduced perpetual futures contracts. 

With regulatory approval to offer perpetual futures to retail customers, Coinbase is now poised to tap into the potential of the largest crypto market. By expanding its product offerings and geographic reach, Coinbase aims to solidify its position as a trusted and reliable platform for cryptocurrency trading.

Per the report, the approval of perpetual futures poses a direct challenge to Binance, which has long dominated the crypto perpetual-futures market. Coinbase’s regulatory compliance and emphasis on safety distinguish it as a reliable alternative for investors seeking secure trading environments. 

Binance’s market dominance has faced scrutiny from regulators worldwide, creating an opportunity for Coinbase to gain market share and establish itself as a credible contender in the derivatives trading space.

Coinbase has encountered regulatory hurdles, including a lawsuit filed by the US Securities and Exchange Commission (SEC) alleging that the platform operated as an unregistered securities exchange. 

The company vigorously denies these allegations. Coinbase recently spearheaded a lobbying initiative in Washington, D.C. to address regulatory concerns and foster a favorable regulatory environment. 

The platform’s executives have advocated for legislative measures to clarify and establish a robust framework for crypto trading in the United States.

Coinbase’s regulatory approval to offer perpetual futures to retail customers outside the United States marks a significant milestone in its expansion strategy. 

By entering the lucrative crypto perpetual-futures market, the firm aims to gain a competitive edge over industry leader Binance while solidifying its reputation as a trusted and secure platform. 

Coinbase
COIN stock’s rally on the daily chart, up by over 6% in the past 24 hours. Source: COIN on TradingView.com

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