Coinbase (NASDAQ:COIN), the U.S.-based publicly traded crypto exchange, has recently expanded its offerings to include Bitcoin and Ethereum futures trading for retail investors. These new contracts are available via Coinbase Advanced and are designed to cater to smaller traders with lower upfront capital requirements, in contrast to offerings from CME. The contracts are structured at 1/100th of a Bitcoin and 1/10th of an Ethereum, thereby democratizing access to the crypto futures market and extending its reach to a wider customer base.
This move is part of Coinbase's strategy to compete with Binance, the global leader in cryptocurrency exchanges. Futures contracts allow traders to speculate on asset prices and trade more assets than they possess by using collateral. For instance, $100 can be used to trade $200 worth of crypto.
The global trading volume of crypto derivatives markets notably surpasses that of spot markets. For example, Binance's 24-hour trading volume for crypto derivatives stands at about $37 million, significantly higher than its $9 million in spot markets.
Recently, following the acquisition of a Bermuda regulatory license, Coinbase launched an offshore exchange specializing in futures. This development underscores the company's ambition to compete with market leaders like Binance, OKX, and BitMart in the trading of risky crypto financial instruments.
The introduction of Bitcoin and Ethereum futures contracts on Coinbase Advanced was made possible after receiving regulatory clearance from the National Futures Association. Coinbase is now operating as a futures commission merchant. Traders possessing a spot trading account can now engage in various trading activities such as risk hedging and market speculation, further extending the accessibility of the crypto futures market to a larger pool of retail customers.
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