Coinbase Approved to Operate a Futures Commission Merchant

Troutman Pepper

Coinbase Financial Markets, Inc., a leading cryptocurrency exchange, announced that it has secured regulatory approval from the National Futures Association (NFA) to operate a futures commission merchant offering crypto futures on its platforms. The NFA is the self-regulatory organization for the U.S. derivatives industry, designated by the Commodity Futures Trading Commission (CFTC). According to Coinbase, its application has been pending since 2021.

Coinbase will now be able to directly offer traditional spot crypto trading alongside regulated and leveraged crypto futures, and the latter will be cleared through designated contract markets registered with the CFTC. “Today, we are pleased to announce that approval has been secured, which will allow eligible U.S. customers to access regulated derivatives products through Coinbase Financial Markets and alongside our spot market for a seamless experience subject to the oversight of the CFTC and the NFA.”

This follows the June 6 announcement (discussed here) that 10 state Attorneys General filed enforcement actions against Coinbase and its parent alleging that Coinbase’s staking rewards program constituted unregistered securities sales in violation of their states’ securities laws. These actions followed an investigation by a multistate task force with assistance from the Securities and Exchange Commission.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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