Welcome, and thank you for being part of the MyZucoins community! Let’s get into an interesting piece of crypto, finance or tech news to stay ahead.
Coinbase, America’s largest digital asset exchange, has gained approval to offer crypto futures to its U.S. customers.
This development is seen as a major regulatory victory amidst a heated standoff with the U.S. Securities and Exchange Commission (SEC), which accuses Coinbase of avoiding necessary registrations.
On the other hand, the National Futures Association (NFA) has greenlit Coinbase to operate a Futures Commission Merchant platform. This move is seen as a significant win for Coinbase and the crypto industry at large.
Observers, including Brian Quintenz, a former CFTC Commissioner, and Brian Armstrong, CEO of Coinbase, have hailed the approval. Armstrong called it a “major moment for crypto clarity” in the United States.
This move positions Coinbase alongside traditional finance firms, as it becomes the first crypto-native company to offer traditional spot crypto trading in tandem with futures products.
Regarding market potential, the global crypto derivatives market was valued at close to $3 trillion in May, per CoinGecko. This market represents around 75% of all trading volumes, indicating a massive opportunity for Coinbase.
Dan Dolev, an analyst at Mizuho Securities, noted that this approval could significantly increase Coinbase’s total addressable market.
While Coinbase’s plans to offer Bitcoin and Ethereum futures contracts to eligible U.S. retail customers were unveiled earlier for mid-2022, the timeline for availability remains unspecified. Read more here.
What Is A Derivative?
A derivative is a financial instrument whose value depends on (or is derived from), the value of another asset known as the underlying asset.
The underlying asset can be a stock, a bond, a commodity, a currency, an interest rate, in this case, a cryptocurrency or even another derivative.
Derivatives are primarily used for two purposes: to hedge risk (i.e., to protect against price movements in an asset) or to speculate (i.e., to attempt to profit from price movements).
The most common types of derivatives are futures, options, swaps, and forwards. Each type has its own risk profile and level of complexity, and they’re often used by those with significant knowledge of relevant markets.
Navigating Regulation: Insights From Coinbase’s Recent Win
A key takeaway from Coinbase’s recent victory in acquiring the approval to offer crypto futures is the importance of regulatory compliance.
In the case of Zucoins and its Splitchain network, this provides a crucial lesson. Zucoins has completed audits and investigations by Australia’s Austrac and ASIC government regulatory departments. It’s one of the first, if not the first, cryptocurrency do to so.
By actively reviewing regulations and ensuring its processes and systems meet operational requirements, Zucoins can position itself as a trusted and reliable player in the crypto space.
By continuing to innovate and improve upon its technology, Splitchain can ensure that it remains at the forefront of the crypto industry, offering a user-friendly and efficient alternative to traditional cryptocurrencies.
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All the best,
Peter & Rob