Coinbase has applied to the National Futures Association (NFA) to register as a Futures Commission Merchant (FCM).
“This is the next step to broaden our offerings and offer futures and derivatives trading on our platforms,” Coinbase said.
US’ biggest crypto exchange does not currently offer any margins after a change in guidelines by the Commodities and Futures Commission (CFTC) in November 2020.
They do not have any futures or any leverage, even for institutional investors, while facing fierce competition by other centralized exchanges as well as more and more from decentralized finance (defi).
dYdX for example is currently handling some $1.3 billion in volumes a day, up from circa $20 million in July.
That follows the launch of zk rollups for the platform, which means to onboard you only make one transaction, an on-chain transaction that goes straight to the L2.
Once you’re in, it’s no different than on Coinbase in as far as a trade is immediate and you do not need an on-chain confirmation or any other confirmation, it just performs.
That’s because the L2 is keeping accounts with zk rollups able to fit tons of transactions, accounts that are then settled only once you withdraw which again is one on-chain transaction.
In contrast, when it was handling $20 million in volumes, you had to go back to the blockchain for any action with all the time and fee costs that entails.
This pretty much better than a cex experience then allows you to trade perpetual futures on numerous cryptos with considerable leverage, so increasing competition.
To keep up, Coinbase is now trying to become a member of this self-regulatory organization (SRO) for the U.S. derivatives industry, including on-exchange traded futures, retail off-exchange foreign currency (forex) and OTC derivatives.
NFA has membership fees, so they’ll probably accept, with futures trading presumably coming to Coinbase soon.