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Coinbase acquires FairX
Derivatives exchange Coinbase, formerly known as FairX, will offer futures contracts priced at 1/100th of Bitcoin through third-party brokers starting Monday. Since the largest exchange in the United States will offer them on its new derivatives exchange platform.
The move comes after Coinbase acquired FairX in January as part of its goal of offering options trading and cryptocurrency futures to its clients. FairX has sold futures products and has been registered with the federal Commodity Futures Trading Commission (CFTC), helping Coinbase start operations in the $3 trillion cryptocurrency derivatives market.
Coinbase Launches 'Nano' Bitcoin Futures Contract
Now, Coinbase has rebranded FairX as coinbase derivatives exchange and "Bitcoin nano futures contracts" equal to 1/100th of Bitcoin, marketed under the code BIT – the first listed cryptocurrency derivative. A Coinbase spokesperson told Decrypt: "This is a step towards creating a strong and regulated cryptocurrency derivatives market.
Boris Ilyevsky, Director of Coinbase Derivatives Exchange, said in a statement that FairX has brought a "world-class team with in-depth expertise in product development, market structure, compliance, market-leading exchange technology, and proven ability to offer listed futures contracts." Along with Coinbase's consumer-friendly interface has made the trading of cryptocurrency derivatives much more accessible.
BIT Futures
Futures contracts are a type of derivative financial product, which sets the date and future price at which the asset must be sold, regardless of the actual market price at the time. When the SEC finally authorized a Bitcoin ETF in October, it only allowed one Bitcoin futures ETF, not a "spot" ETF tied to bitcoin's current price.
Many traders prefer the form of futures contracts because they allow round-the-clock trading, lower upfront investments "and easy long-term purchases," Ilyevsky said. "Our BIT futures contracts will offer the same benefits but are built with the attention of the retail trader."
Competitive exchange FTX is on a similar path, following its acquisition of LedgerX in August. Binance also offers derivatives, but has been withdrawn in some markets due to regulatory concerns.
It is important to note that BIT futures will not be offered directly from Coinbase, but only from third-party retail brokers and clearing companies. Starting June 27, Coinbase BIT futures contracts will be available from companies such as EdgeClear, Ironbeam, NinjaTrader, Optimus Futures, Stage 5, and Tradovate.
Although the overall cryptocurrency Market Capitalization has shrunk significantly in recent weeks, Ilyevsky said enhanced accessibility and additional product development will "usher in significant growth." "It is more important than ever to bring the benefits of futures contracts to a broader market," he said, "so that all types of traders can access U.S. controlled cryptocurrency derivatives markets to express their views or protect their underlying crypto assets."
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