Yesterday, Coinbase customers in the United States received some great news if they’re interested in Bitcoin and cryptocurrency trading.
Despite previous hints of leaving, the largest US exchange, Coinbase, has now decided to stay and further develop its crypto services tailored for the US market.
Great News for US Traders: Coinbase Offers Regulated Crypto Futures Trading
Coinbase’s subsidiary, Coinbase Financial Markets (CFM), has obtained regulatory approval to provide cryptocurrency futures. The exchange introduced Coinbase Advanced in September, a retail trading platform that now enables US users to trade regulated perpetual futures contracts.
These contracts are tailored for retail traders, with small denominations, allowing them to manage risk, diversify, trade with leverage, and speculate on market direction. This expansion is vital given that the majority of Coinbase’s users are from the United States.
Coinbase Advanced Integration and Regulation in the United States
The Coinbase Advanced platform is fully integrated with the main Coinbase exchange, providing a seamless experience for traders to access both spot and futures markets using a single account and login. This integration is similar to what’s seen on other cryptocurrency exchanges, although it’s noteworthy because it caters to the general public in the United States.
For example, Binance, an international exchange, does not serve U.S. users, leading to the creation of a separate platform called Binance US, which later faced regulatory issues and ceased operations in this specific market. Given these factors and the challenges that FTX and Binance US have encountered, it was likely a complex process for Coinbase to secure the necessary approvals for offering this service.
FTX, a popular crypto futures exchange platform in the United States, shut down about a year ago. Now, when U.S. customers visit advanced.coinbase.com, they will find a new “Futures” section in the left-hand menu, alongside other categories like Spot, Wallet, Orders, and Other.
To trade on coinbase.com/futures, traders must complete an application and receive approval by providing required personal information. It’s important to note that all futures contracts on Coinbase Advanced are settled in USD.
Cryptocurrency Derivatives
Cryptocurrency futures are a top choice for speculators, and there are two key reasons behind this preference. Firstly, futures offer the ability to engage in leveraged trading, meaning traders can borrow funds to potentially achieve higher returns. However, it’s important to note that this comes with a risk of significant losses, so it’s typically recommended for experienced traders who are well-prepared to handle such risks.
The second advantage of futures is the flexibility they provide for more experienced traders. With futures, traders can place bets on both rising and falling prices. This means they can take long positions, which speculate on price increases, as well as short positions, which bet on price declines. While it’s possible to achieve something similar in spot markets with certain strategies, the combination of leverage and long/short positions offered by futures is unmatched.
As a result, most speculators tend to favor trading in the futures market. To put this into perspective, consider that in the past 24 hours, there were approximately $12.4 billion in trades on Binance’s spot market, while the same platform’s futures markets saw up to $58 billion in trading volume.
It’s worth noting that medium- to long-term investors often prefer spot markets, while short-term speculators tend to gravitate towards the derivatives market, which includes futures and options.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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