Coinbase Global, the largest cryptocurrency exchange in the US, has received approval from a regulatory body to offer cryptocurrency futures and options to its retail customers.

The move could boost Coinbase’s revenue and market share, as well as attract more investors to the crypto space.

According to a statement from Coinbase on Wednesday, the National Futures Association (NFA), a self-regulatory organization designated by the Commodity Futures Trading Commission (CFTC), has granted Coinbase Financial Markets, a subsidiary of Coinbase, the permission to operate as a futures commission merchant. This means that Coinbase can now offer its customers the ability to trade crypto derivatives, such as futures and options, on its platform.

“This is a critical milestone that reaffirms our commitment to operate a regulated and compliant business,” Coinbase said.

Crypto derivatives are contracts that derive their value from the price movements of underlying cryptocurrencies, such as bitcoin or ethereum. They allow traders to speculate on the future price of crypto assets, as well as hedge against risks and volatility. Crypto derivatives are popular among institutional and professional investors, as they offer higher leverage and liquidity than spot trading.

The global crypto derivatives market is estimated to account for almost 80 per cent of the entire crypto market, with monthly trading volumes reaching about $1.85 trillion in July, according to research firm CCData.

Coinbase’s entry into the crypto derivatives market could give it a competitive edge over its rivals, such as Kraken, Gemini and Binance US, which do not offer such products to their US customers. Coinbase could also benefit from the growing demand for crypto derivatives among retail investors, who are looking for more ways to participate in the crypto economy.

Coinbase’s approval comes amid a legal dispute with the Securities and Exchange Commission (SEC), which has sued Coinbase for allegedly operating an unregistered securities exchange. The SEC claims that Coinbase’s lending program, which would allow customers to earn interest on their crypto holdings, violates federal securities laws.

Coinbase’s CEO Brian Armstrong has accused the SEC of being hostile and unclear towards the crypto industry, and has said that more US crypto companies could move offshore due to the regulatory uncertainty. He has also criticized SEC Chair Gary Gensler’s enforcement-first approach, which he says could stifle innovation and growth in the crypto sector.

Coinbase said that it expects to launch its crypto derivatives products in the coming months, subject to final regulatory approvals and operational readiness. The company said that it will provide more details on its product offerings and eligibility criteria in due course.

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