JPMorgan: Coinbase’s crypto-futures approval legitimises Bitcoin in the United States

Coinbase’s approval by CFTC to offer futures trading based on cryptocurrencies signals the resilience of digital assets in the United States. JPMorgan analysts arrived at this conclusion, The Block.

On August 16, 2023, regulator-authorised NFA issued a license to Coinbase Financial Markets to engage in such activity after its subsidiary obtained a FCM license.

In 2022 the exchange acquired FairX — a regulated CFTC platform for crypto derivatives, which was renamed Coinbase Derivatives Exchange.

The platform is open to external brokers, FCMs and market-makers.

Coinbase filed an application with the NFA in September 2021.

Launch of the service for selected users is expected in the coming weeks.

Analysts noted that this step will open a new revenue stream for the company worth hundreds of millions of dollars over the next two years. Given the high share of derivatives in total trading activity, NFA approval strengthens the growth potential in the long term.

“Organizations will need time to scale their activity on a broader retail platform,” — experts explained.

Overall, the development adds confidence to the presence of cryptocurrency in the United States, despite the regulatory campaign against companies in the industry. The news eases fears that industry participants would be pushed out beyond the United States, experts said.

JPMorgan believes that regulatory pressure, in the end, could benefit Coinbase by giving it a competitive edge as regulatory uncertainty subsides.

In May 2023, Coinbase launched an international exchange for trading crypto derivatives.

In May, Gemini founders Cameron and Tyler Winklevoss said they planned to open the company’s London headquarters amid a hostile regulatory climate in the United States.

Two major market-makers — Jane Street and Jump Trading — announced they would cease operations with digital assets in the country.

In Hong Kong, Coinbase was urged to switch jurisdiction after the SECfiled a suit against the American exchange. Earlier, authorities said they were ready to welcome crypto companies from around the world.