Coinbase Global has received regulatory approval to introduce perpetual futures to retail customers outside of the United States, marking a significant milestone for the company in the world’s largest cryptocurrency market.
In a blog post, Coinbase stated that its Coinbase Advanced platform will begin offering eligible customers the opportunity to invest in perpetual futures “in the coming weeks.”
As a result of this positive news, Coinbase stock saw a slight increase of approximately 0.2% in early Thursday trading, reaching $71.66 per share. Notably, the company’s stock has more than doubled in value this year.
Overseas, derivatives such as perpetual futures have gained popularity and now dominate the cryptocurrency trading market. It is worth noting that these products are not currently available to retail investors in the United States. For instance, Binance, the largest cryptocurrency platform, saw investors trade approximately $5 billion worth of tokens on the spot market in the last 24 hours, while trading activity for derivatives reached a staggering $28.5 billion.
The Rise of Perpetual Futures in the Crypto Market
Perpetual futures, unlike traditional futures, do not have an expiration date. These innovative financial instruments are designed to closely track the price of the underlying asset. Their popularity is soaring among retail investors who seek leveraged bets with less upfront capital.
Coinbase, one of the leading cryptocurrency exchanges, recently expanded its services to international markets by introducing perpetual futures contracts. This move allowed non-U.S. institutions to engage in trading these unique financial products. Moreover, Coinbase obtained regulatory approval in the U.S., enabling it to offer federally regulated crypto futures. Consequently, it now competes directly with firms that provide established futures contracts for Bitcoin and Ether.
The approval granted to Coinbase on Thursday imposes a significant challenge to Binance, which has long reigned as the dominant player in the crypto perpetual-futures market. Over time, Binance has encountered scrutiny from global regulators. In contrast, Coinbase’s blog post emphasizes its reputation as “the most trusted and safest name in crypto.”
Despite its recent success, Coinbase has had its fair share of regulatory obstacles this year. In June, the Securities and Exchange Commission filed a lawsuit against Coinbase, accusing the exchange of operating as an unregistered securities exchange—an allegation that Coinbase vehemently denies. In an effort to address regulatory concerns, Coinbase has spearheaded a lobbying campaign in Washington, D.C., aimed at urging lawmakers to enact legislation that would establish clear guidelines for crypto trading in the country.
In conclusion, perpetual futures have revolutionized the crypto market by offering investors a derivative product without an expiration date. Coinbase’s entry into this sector has disrupted Binance’s dominance and further solidified its reputation as a trusted player in the industry. However, both exchanges continue to navigate regulatory challenges, seeking to create a secure and transparent environment for crypto trading.
