Coinbase enters the derivatives game with its first offering. The platform said its ‘Nano’ Bitcoin futures will require less upfront capital than traditional products. The size of each contract offered through third-party retail brokers will be equal to 1/100 of a Bitcoin.
Major U.S. crypto exchange Coinbase has said it will begin listing “Nano” (BIT) Bitcoin futures contracts next week, made possible by its recent acquisition of a platform aimed at tapping into the lucrative crypto derivatives market, according to Blockworks. The size of each contract offered through third-party retail brokers will be equal to 1/100 of a Bitcoin. They are expected to start trading on the Coinbase Derivatives Exchange (formerly FairX) on June 27.
FairX, a derivatives exchange regulated by the Commodity and Futures Trading Commission, was acquired earlier this year—for an undisclosed amount—in an attempt to diversify Coinbase's offerings. Coinbase is awaiting the approval of its license to operate as a futures commission merchant, which will allow it to directly offer margined futures contracts to its customers. This acquisition was key in Coinbase's journey to offer cryptocurrency derivatives to retail and institutional clients in the U.S.
The BIT contract will be Coinbase's first registered crypto derivatives product. Trading volumes in this sector continue to grow, and now are in the trillions of dollars. Research by CryptoCompare shows that the derivatives market currently accounts for 61.7% of the total crypto market.
Coinbase hopes that its retail-focused contracts, combined with a user-friendly interface, will be enough to turn users away from competitors like Binance, which accounted for 58% of total derivatives volume over the same period.
“At 1/100th of the size of a Bitcoin it requires less upfront capital than traditional futures products and creates a real opportunity for significant expansion of retail participation in US regulated crypto futures markets,” Coinbase said in its post.
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Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.