Coinbase Exchange Set To Launch Cryptocurrency Treading Futures, Boycott U.S.

Coinbase Exchange Set To Launch Cryptocurrency Treading Futures, Boycott U.S.

Coinbase Exchange has today announced that they are getting ready to launch cryptocurrency futures trading. This change comes with a crucial twist, with the company stating that consumers in the United States cannot access these futures.

A look into Coinbase operations reveals that derivative products have become the pillar of the cryptocurrency sector since they make up about 75% of daily bitcoin trading volumes. Coinbase recorded an $5.5 billion in notional institutional trading volume in derivative products in the second quarter of this year.

The company said it entered the futures trading market because of the substantial demand for cryptocurrency derivatives. Coinbase also said in its statement that since the launch of cryptocurrency futures trading, Coinbase has made a significant advancement in its efforts to diversify its product line and compete with other popular exchanges in the quickly growing global cryptocurrency sector.

Coinbase Gives Reasons For Excluding U.S. Users

Coinbase has given its reasons for its choice to bar users from the United States from accessing these futures contracts. The statement said that the decision is a calculated response to the continuing legal issues that Coinbase is going through in the country.

Amid the claims that it functioned as an unlicensed broker-dealer, the exchange is currently locked in an existential legal struggle with the U.S. Securities and Exchange Commission (SEC). According to the function of this selective strategy, as explained in the company statement, customers who match the Coinbase Advanced eligibility requirements will be the only ones eligible to purchase futures contracts on Coinbase.

Only qualified and experienced traders will have access to these high-risk financial instruments. The institutions also added that customers of Coinbase Advanced must often meet strict requirements, which may include trading volume, account balance, and identification verification.

The outcome for futures-based ETFs is still rewarding amid it’s bearish outlook. Non-ETF-related futures items contributed 48% of the product’s quarterly highs. News also has it that the Security and Exchange Commission (SEC) has recently encouraged macro uncertainty by withdrawing the approval deadlines issued to over seven ETFs responsible for tracking the BTC spot price. Analysis on Bein Crypto writes that an official approval may lead to companies buying and holding assets in the name of their clients, reducing the circulation supply while increasing the price.

Sudden Instability Hits The Cryptocurrency Market, Coinbase Entry Linked

However, there has been some instability recently on the Bitcoin futures market. When writing, open interest (OI) in Bitcoin futures on the Chicago Mercantile Exchange (CME). was 78,755 BTC, down from a high of 83,350 BTC on September 19th.

This reduction in open interest reflects the shifting trading activity and emotion in the cryptocurrency market, which various factors, such as macroeconomic developments and regulatory changes, can influence. It was also gathered that the futures exchange-traded fund (ETF) sector has had outflows in five consecutive weeks.

There are high hopes that this trend may not be preserved until there’s a change in the macro conditions. This situation was reflected in ProShares’ cryptocurrency futures ETFs when it recorded a downward outflow in 42 out of 50  market trading days on July 13.

Meanwhile, the Coinbase ETF launch is coming when there is noticeable indifference in the cryptocurrency trading market. Observation into Open interest from last week and major indicators that show the investor’s sentiments were low on the CME.

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Jesse Rosenbalm
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Jesse Rosenbalm

Jesse Rosenbalm stands out in the crypto journalism realm, seamlessly blending intricate blockchain concepts with accessible prose. Known for his deep dives and accurate forecasting, Jesse's articles are a must-read for both novices and experts. As crypto trends shift, his insightful writings remain a beacon in the digital currency space.

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