US Coinbase Derivatives Exchange Offers Futures Trading of Bitcoin and Others for Institutional Investors

Growing demand from institutional investors

Coinbase Derivatives Exchange in the United States announced on the 1st that it plans to offer futures trading of crypto assets (virtual currencies) Bitcoin (BTC) and Ethereum (ETH) to institutional investors.

Established in 2022, Coinbase Derivatives Exchange is a U.S. Commodity Futures Trading Commission (CFTC) regulated exchange. You can trade through a broker.

So far, the company has offered nano Bitcoin (BIT) and nano Ether (ETI) contracts, but new products are joining its lineup in response to increased demand from institutional investors.

The new futures contracts offered are Coinbase Bitcoin (BTI) and Coinbase Ethereum (ETI). Set with trade sizes of 1 BTC and 10 ETH per contract, respectively, and settled monthly in USD. Based on current prices, the notional value of BTI and ETI would be ¥4.2 million ($30,000) and ¥2.8 million ($20,000) respectively.

According to Coinbase, “lower fees compared to other U.S. regulated derivatives exchanges will allow us to precisely manage risk for attractive returns.”

It also plans to offer an incentive program for early adopters of new products. However, specific fees have not yet been disclosed.

connection:Soaring alt market rebounds, US CME bitcoin futures share hits record high

Bitcoin futures market

The CME (Chicago Mercantile Exchange) holds the top share in the bitcoin futures market for institutional investors. CME Bitcoin Futures has a contract size of 5 BTC, equivalent to approximately ¥19 million ($135,000) based on current prices.

Cryptocurrency derivatives such as options and futures were frequently traded on offshore exchanges such as Binance, OKX and formerly FTX. However, after the FTX bankruptcy in November last year, the regulatory authorities tightened their crackdowns and investigations, and the demand is shifting to the United States.

About 33% of cryptocurrency futures and options trading took place outside the United States in 2022, and that number is set to rise to 35% by 2023, according to CME data.

Total open interest in offshore futures fell 18.6% in January 2023. By comparison, average daily trading volume for Bitcoin futures on CME has increased 32% since December. CME’s share of total open interest in BTC futures has risen to a record high of about 21%, but it is still down 41% year-on-year in trading volume.

connection:Ethereum Futures Monthly Trading Volume Reaches Highest Level Since May Last Year as Bitcoin Tangles at Recent Highs

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