Summary
- The CFTC has authorized Coinbase to provide U.S. clients access to offshore crypto perpetual futures via its subsidiary, Deribit.
- Crypto perpetual futures are high-risk, leveraged investments on cryptocurrency prices without a set expiration.
- This development could enable other U.S. exchanges to introduce similar trading options.
The Commodity Futures Trading Commission (CFTC) has approved Coinbase to facilitate crypto perpetual futures, allowing the exchange to connect its U.S. customers to a lucrative yet risky offshore market.
Through its acquisition of Deribit, an offshore crypto options exchange purchased for $2.9 billion last year, Coinbase can now offer access to the global crypto perpetual futures market. These contracts, which have no expiration, permit traders to engage in highly leveraged betting on the future prices of cryptocurrencies using borrowed funds.
A knowledgeable source informed Decrypt that Coinbase has yet to announce which specific cryptocurrencies will be available for perpetual futures trading. The CFTC has cleared the company to offer all “digital commodity” perpetual futures contracts available on Deribit, including tokens such as Bitcoin, Ethereum, Solana, Dogecoin, and the TRUMP meme coin, among others.
According to the source, Coinbase will evaluate which assets are suitable and appropriate for offering U.S. customers perpetual futures trading.
Successful predictions on perpetual futures can yield traders returns that exceed their initial investments. However, incorrect predictions can lead to swift liquidations or forced closures by exchanges, potentially causing significant financial fallout. For instance, last fall, a single day's volatile crypto price movements resulted in the loss of $19 billion in crypto positions in mere minutes, driven largely by the high levels of leverage involved.
The CFTC has indicated for more than a year its intent to incorporate crypto perpetual futures, also referred to as “perps,” into the U.S. market. While these products carry risks, they also present substantial profit potential; in the last month alone, the crypto perps market generated over $588 billion in trading volume, as reported by DeFi Llama. In comparison, the broader decentralized finance (DeFi) ecosystem recorded only $160 billion in trading volume during the same timeframe.
On Thursday, Coinbase submitted a letter to the CFTC requesting a no-action letter, which would protect the company from legal action while it begins to offer offshore crypto perps. Within 24 hours, the CFTC responded with a comprehensive 16-page document detailing a new policy that allows Coinbase to proceed with its plans.
Alongside granting Coinbase permission to offer offshore crypto perps domestically, the CFTC also approved prediction market Kalshi to launch its own Bitcoin perpetual futures in the U.S.—marking the first instance of such a product being developed in America.
As Coinbase becomes the first U.S. cryptocurrency exchange to gain approval for providing access to the global crypto perps market, it is expected that other exchanges will quickly follow suit, taking cues from the guidelines established in the CFTC’s no-action letter.