The Commodity Futures Trading Commission (CFTC) has authorized Coinbase to offer crypto perpetual futures, paving the way for the U.S. exchange to connect its customers to the high-stakes offshore market.
Access to Offshore Market
Coinbase is now effectively permitted to provide its customers access to the global crypto perpetual futures market through Deribit, an offshore crypto options exchange Coinbase acquired for $2.9 billion last year. Perpetual futures are derivative contracts without an expiration date, allowing traders to make highly leveraged bets on the future price of crypto assets using borrowed capital.
A source familiar with the matter told Decrypt that Coinbase has yet to determine which crypto assets it will enable for perpetual futures trading. The CFTC has cleared the way for the company to offer all “digital commodity” perpetual futures contracts traded on Deribit—a category that includes markets for tokens such as Bitcoin, Ethereum, Solana, Dogecoin, and the TRUMP meme coin, among others.
Coinbase will decide which of those assets are “fit for purpose” and “the right kind of assets” to offer U.S. customers in the form of perpetual futures, the source said.
Risks and Rewards
Successful bets on perpetual futures can yield significant returns for traders. However, losing bets can be quickly liquidated or forcibly closed by exchanges, potentially triggering a devastating cascade effect. Last fall, rapid price fluctuations in crypto markets wiped out $19 billion worth of crypto positions within minutes, largely due to the extent of leverage.
CFTC’s Stance
The CFTC has indicated for over a year its intention to regulate crypto perpetual futures, also known as “perps,” within the United States. While risky, the crypto perps market is highly lucrative. According to DeFi Llama, the past month alone saw over $588 billion in crypto perps trading volume. In contrast, the entire decentralized finance (DeFi) ecosystem saw just $160 billion in trading volume during the same period.
On Thursday, Coinbase sent the CFTC a letter requesting a no-action letter—a guarantee that the regulator would not sue if Coinbase began offering customers access to offshore crypto perps. Less than 24 hours later, the CFTC responded with a detailed, 16-page document outlining a new policy permitting Coinbase’s requested activities.
New Product Approval
In addition to granting Coinbase the ability to offer offshore crypto perps on its domestic exchange, the CFTC also approved prediction market Kalshi to create its own Bitcoin perpetual futures in the United States—the first such American-born product of its kind.
While Coinbase is the first U.S. crypto exchange to receive approval to offer U.S. customers access to the global crypto perps market, other exchanges are expected to follow suit, referencing the guidelines outlined in the CFTC’s no-action letter.
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