Coinbase Derivatives Plans Cash-Settled Futures for Dogecoin, Litecoin, and Bitcoin Cash
Coinbase, a prominent crypto exchange, is gearing up to launch futures trading for some notable cryptocurrencies, including the popular meme coins Dogecoin (DOGE), Litecoin (LTC), and Bitcoin Cash (BCH).
Coinbase believes that Dogecoin’s sustained popularity indicates it has evolved beyond its meme beginnings to establish itself as a significant player in the cryptocurrency market.
Coinbase Derivatives Plans to Launch Cash-Settled Futures Contracts for Cryptocurrencies, Including Dogecoin
In letters addressed to Commodity Futures Trading Commission (CFTC) Secretary Christopher Kirkpatrick on March 7, Coinbase Derivatives intended to launch cash-settled futures contracts for Dogecoin, Litecoin, and Bitcoin Cash, potentially starting on April 1. These contracts, if approved, would allow traders to speculate on the future price movements of these cryptocurrencies without directly owning them. The filing specifies details like contract size, settlement methods, and overall structure.
Coinbase is reportedly leveraging a self-certification process outlined in CFTC Regulation 40.2(a) to list these futures contracts. This process allows them to list the contracts without explicit CFTC authorization, as long as they comply with existing regulations.
Coinbase’s developments into regulated futures trading in the US follow its acquisition of FairX, a CFTC-approved derivatives exchange, in 2022. This move, together with their August 2023 approval for futures trading despite SEC scrutiny, suggests a strategic shift.
At the time of the FairX acquisition, Coinbase expressed its aim of making the derivatives market more accessible to its millions of retail customers, indicating a strategic focus on broadening its services and catering to a broader range of investors.
Additionally, Coinbase defends listing Dogecoin futures by emphasizing its enduring popularity and active community, implying the memecoin has evolved into a more established cryptocurrency. Coinbase noted,
“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.”
Following the announcement, Dogecoin, Litecoin, and Bitcoin Cash saw significant price surges. As of the publication, DOGE experienced a 16.1% price increase, Bitcoin Cash (BCH) was up by 11.4%, and Litecoin (LTC) increased by 7.8%, surpassing the overall crypto market’s growth of 6.2% at the same time.
Coinbase’s Listing of Crypto Futures Contracts Sparks Speculation on Regulatory Maneuvering
Coinbase’s foray into future contracts has stirred the crypto community, as this move might raise some interesting regulatory questions. As of now, the CFTC still maintains its stance on Bitcoin and Ether, classifying them as commodities, while the Securities and Exchange Commission (SEC) is more ambiguous as it recognizes all cryptocurrencies developed from Bitcoin as commodities.
The decision to list futures contracts for Dogecoin, Litecoin, and Bitcoin Cash has raised eyebrows among market commentators. Some speculate that Coinbase might strategically stir some regulatory decisions, particularly by poking the SEC regarding its stance on crypto assets.
A recent X post from Bloomberg exchange-traded fund analyst James Seyffart speculated that Coinbase’s futures filings might be a calculated move to prompt the SEC to reconsider its stance on categorizing cryptocurrencies with the exact proof-of-work consensus mechanism as Bitcoin as “securities.”
Seyffart wrote,
“Wonder if the SEC objects to these being classified ‘commodities futures’ vs ‘ securities futures.’ These [are all based on] Bitcoin so ‘these are securities’ claims would be hard to make after spot Bitcoin ETF approvals.”
