Coinbase Derivatives has unveiled plans to introduce cash-settled futures contracts for Dogecoin, Litecoin, and Bitcoin Cash.
Announced in letters to the United States Commodity Futures Trading Commission (CFTC) on March 7, this initiative marks a significant expansion of Coinbase’s product line, aiming for an April 1 launch date.
What is Coinbase’s Strategy With Futures Listing
The filing flew under the radar initially, escaping widespread community attention. Currently, the CFTC’s response remains pending. However, if no objections arise, these futures, including a Dogecoin Futures ETF, will commence trading by April Fool’s Day.
Importantly, Coinbase has opted for self-certification under CFTC Regulation 40.2(a), a move that accelerates the listing process by circumventing direct CFTC approval.
Transitioning into regulatory navigation, Coinbase’s acquisition of the CFTC-regulated FairX derivatives exchange in 2022 laid the groundwork for these developments. By August 2023, the firm had already obtained approval for regulated futures trading in the US, notwithstanding the SEC’s investigative glare.
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Following the announcement, Dogecoin, Litecoin, and Bitcoin Cash experienced significant price increases, highlighting market receptivity. The choice to list Dogecoin futures is emblematic of the asset’s evolution from a meme to a major crypto asset.
“Dogecoin’s enduring popularity and the active community support suggest that it has transcended its origins as a meme to become a staple of the cryptocurrency world,” Coinbase wrote.
Coinbase’s strategic filing with the CFTC, rather than the SEC, reflects a tactical approach to regulatory engagement. Given the SEC’s rigorous stance on crypto classifications, led by Chair Gary Gensler, the CFTC’s relatively more amenable posture offers a contrasting regulatory environment.
Market observers are interpreting Coinbase’s move as a potential strategy to influence SEC rulemaking. This initiative could redefine the regulatory dialogue surrounding crypto assets. Analysts suggest that by securing a commodity futures classification for these cryptocurrencies, Coinbase is challenging the SEC’s securities designation.
Bloomberg analyst James Seyffart speculated on social media about the filings’ strategic nature. He posited that they might be aimed at compelling the SEC to align its classification of proof-of-work crypto assets with that of Bitcoin, thereby avoiding the “securities” label.
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“Honestly. If the SEC would just engage with the industry on making some rules about this stuff, we wouldn’t have moves like this,” Seyffart said.
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