Crypto trading platform Coinbase has received regulatory approval from the Bermuda Monetary Authority (BMA) to bring perpetual futures trading to retail customers outside of the United States.
Following Thursday’s announcement, COIN shares popped 6.81% on the day.
Perpetual Futures Comes to Retail
In the company’s announcement on Thursday, Coinbase framed its offering as part of its “Go Broad, Go Deep” strategy – an effort to partner with global regulators who are working to enact clear rules for the crypto industry.
“Our perpetual futures contracts have been built within rigorous compliance standards on Coinbase International Exchange and have already seen over $5.5 billion in notional trading volume from institutions as of Q2,” Coinbase stated.
Perpetual futures are futures contracts without an expiry date. They allow traders to open both long and short positions for an indefinite period of time, paying a periodic “funding rate” depending on whether their position is underwater or not. They may close their position at any time.
Such services let traders get leveraged exposure to crypto’s booms and busts without needing to own actual cryptocurrencies. Globally, derivatives of the sort occupy ~75% of crypto trading volume
Coinbase introduced perpetual futures trading at Coinbase International for institutional clients back in May. Contracts are available solely for Bitcoin (BTC) and Ethereum (ETH), settling transactions in the dollar-pegged stablecoin USDC.
As a retail user, trading perpetual futures still requires opening a Coinbase Advanced trading account, which puts applicants through standard assessment checks to determine their eligibility.
Coinbase claims to stand out from other crypto derivatives platforms thanks to its compliance standards and user protections. These include audited financial statements, its USDC-funded insurance fund, and dedicated risk team.
The company remains the only publicly traded crypto exchange platform.
Regulatory Hostitlity For Competitors
Coinbase noted that the approval arrives amid rising scrutiny from global regulators against other crypto firms, which have fled certain regions due to their inability to comply with local laws.
Earlier this month, Bybit confirmed that it would need to exit the United Kingdom in anticipation of strict financial promotion laws that take effect in early October. Meanwhile, dozens of crypto firms – including Coinbase itself – have faced lawsuits from the Securities and Exchange Commission (SEC) in the U.S. for failure to comply with local securities laws.
“We chose to build our business and become a public company in the U.S. believing that the U.S. should be at the forefront of efforts to update our financial system,” noted Coinbase in its announcement.