Coinbase gets regulatory nod to allow perpetual futures

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Coinbase gets regulatory nod to allow perpetual futures

Cryptocurrency exchange Coinbase announced in a statement that it has received regulatory permission in Bermuda to allow for theissuance of perpetual futures to users outside of the United States.

The move comes as no surprise, as coinbase acquired a Bermuda license to operate a spot exchange in April, following a gung-ho approach by U.S. regulators, with the ultimate aim of rolling out a perpetual futures platform.

Perpetual futures are a type of cash-settled derivatives contract that let traders 'long' or'short' an underlying asset with leverage. Permanent swap traders pay a funding rate that encompasses the difference between mark and index price of the underlying asset, which ensures that prices stay efficient.

The cryptocurrency market's overall liquidity and trading volume has decreased significantly following the collapse of FTX last year, which was the largest cryptocurrency futures platform at the time. Almost a year later, the market is still reeling from that slump, with thin liquidity still concentrated across a few exchanges.

Binance is now the top trading platform in the crypto industry, with a trading volume of tens of billions. Binance's spot market has grown 6 billion in volume compared to Coinbase's $1.2 billion, while Binance generated $32 billion in trading volume over the past 24 hours, equating to around $9.6 million in daily revenue from trading fees. If Coinbase has access to a significant portion of this market, it can continue its streak of surpassing revenue forecasts.

s well positioned to capture significant market share, Carey said in a statement. It is a fact that major traders and institutions may be skittish to hold substantial amounts of money on the exchange. On the other hand, coinbase is one of the most reliable exchanges, which sets them up well.