TL;DR: Coinbase’s approval to offer crypto futures gives mainstream investors easy access to a $1.85 trillion market. But while this centralizes crypto trading, we must not forget the original decentralized goal of truly owning your own wealth outside the reach of political power.
Coinbase has scored a major victory in its quest to expand regulated crypto offerings in the United States. The cryptocurrency exchange announced this week that it has secured approval from the National Futures Association (NFA) to provide crypto futures trading directly to retail customers.
This is a big deal for the average crypto investor. Futures allow speculators to bet on crypto price movements without owning the actual coins. The global crypto futures market is worth $1.85 trillion, nearly 80% of total crypto trading. By tapping this market, services like Coinbase make it easier for mainstream investors to access and profit from crypto’s volatility.
However, there is a downside to all this centralized trading. The original vision for crypto was a permissionless money system that allowed individuals to truly own their wealth, untouched by political power. So while using Coinbase is fine to get started, true financial sovereignty means becoming your own custodian by holding crypto yourself.
Massive New Market Unlocked for Retail Traders
The move will give regular investors access to bitcoin and ether futures, a market that has until now only been open to institutional traders.
For Coinbase, the approval opens up a new growth avenue and revenue stream, while also bolstering its credibility as a regulated crypto company amid ongoing tensions with the Securities and Exchange Commission.
Milestone in Federal Oversight of Crypto
Futures trading will be overseen by the Commodity Futures Trading Commission (CFTC) and NFA, providing a level of federal regulation largely absent in the crypto spot trading market.
Coinbase hailed the approval as a “significant milestone” in bringing oversight to crypto, two years after it first applied for a license. The company has positioned itself as a compliant operator, unlike some offshore rivals.
Boost to Coinbase’s Growth Ambitions
With its core trading business cooling along with the crypto market downturn, Coinbase has been eager to tap new offerings like staking, NFTs, and now futures to reignite growth.
For US crypto adoption, easier access to derivatives like futures could enable broader participation and maturity for the asset class over time. However, these products also carry significant risks for retail investors. With the proper guardrails in place, increased futures access provides investors more tools to manage risk.
As Coinbase expands into new markets like futures and NFTs, its ability to offer a compliant yet innovative suite of products will be key to maintaining its leadership position. While regulatory tensions persist, measured oversight alongside enabling innovation remains the ideal balance for crypto to flourish responsibly.
Just remember, while services like Coinbase make crypto investing more accessible, true decentralization means taking custody of your own coins. The freedom to own your wealth, unaffected by political power, is the real promise of crypto.
The Balance Between Crypto Security and Convenience
The aftermath of FTX’s collapse in 2022 reiterated a critical crypto adage: “Not your keys, not your coins.” This saying emphasizes the importance of owning the private keys to one’s cryptocurrency holdings to truly control them. FTX users, who entrusted the exchange with their wallets and keys, faced challenges accessing their funds during theexchange’s liquidity crisis. While centralized exchanges like FTX offer convenience, they retain custody of users’ private keys, potentially leaving investors vulnerable to platform issues or cyber threats. On the flip side, self-custody, such as using hardware wallets like Ledger,allows users full control over their crypto assets, though it comes with the responsibility of ensuring key security. Ledger devices prioritize users’ security by keeping private keys shielded from potential threats while still offering an accessible user experience.
Thank you for reading “Coinbase Scores Regulatory Win With Approval of Crypto Futures“.
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