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- The largest bitcoin exchange in the United States is seeking to enter the derivatives market, which is not surprising
- For starters, being the only publicly traded firm in the bitcoin sector, Coinbase adds a unique degree of legitimacy to the space
- With more than $200 billion in assets under control, the exchange is also one of the major cryptocurrency investors. Binance, on the other hand, has a market capitalization of less than $40 billion
The largest bitcoin exchange in the United States is seeking to enter the derivatives market, which is not surprising. It’s also risky, especially given Coinbase’s public announcement that it had applied to the National Futures Association to register as a Futures commission merchant, which came during tensions with the SEC. While the Bitcoin and altcoin markets have stabilized, Coinbase’s potential foray into the derivatives market might have significant ramifications for other exchanges. It’s also likely to result in a new wave of adoption. The one gaping hole in Coinbase’s income stream over the previous few years has been the lack of Futures and Options trading. Binance, for example, has a daily Futures trading volume of more than $10 billion. As a result of Coinbase’s entry into the market, the game may have changed for all derivatives platforms.
For starters, being the only publicly traded firm in the bitcoin sector, Coinbase adds a unique degree of legitimacy to the space. Furthermore, the CME Group and Kraken are the only major Futures and Options platforms located in the United States. Kraken exclusively sells its service to those outside of the United States. Coinbase will scarcely break a sweat when it comes to building a market. Coinbase’s user base has nearly quadrupled since 2019, rising from 30 million to about 56 million at press time. Furthermore, the number of monthly active users has grown dramatically from 2.8 million in 2020 to 8.8 million in 2021.
With more than $200 billion in assets under control, the exchange is also one of the major cryptocurrency investors. Binance, on the other hand, has a market capitalization of less than $40 billion. Initially, the change may appear to be minor. Coinbase’s derivatives arm, on the other hand, will bring more organic involvement from the US forward, perhaps increasing the adoption rate for these assets. Existing investors will be more motivated to keep watch on the market if their involvement with derivatives trading on the platform rises, even if it does not bring in new customers organically.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
