The news that Coinbase will launch its first cryptocurrency derivatives product aimed at retail traders is a welcome development for the digital currency community. The new product, Nano Bitcoin futures (BIT), will be priced lower than traditional bitcoin futures, and will also offer fraud prevention and integrated secure asset storage. This is exciting news for retail traders, especially those who are new to the cryptocurrency space.
Coinbase is a cryptocurrency derivatives platform
Coinbase is a leading crypto exchange in the United States. It recently acquired FairX, a futures platform regulated by the Commodity Futures Trading Commission (CFTC). The new venture will allow Coinbase to offer crypto derivatives directly to its customers. While the cryptocurrency derivatives market is worth $3 trillion globally, there are only a few regulated companies operating in the US.
The direct listing of Coinbase brought crypto to the mainstream and gave the platform a leg up in a crowded financial services industry. The direct listing of Coinbase may make it a Netscape for crypto: the internet browser sensation that fueled the dot-com stock bubble. Despite its high price, Netscape failed to catch on and Microsoft’s Internet Explorer eventually swept it away.
It will launch Nano Bitcoin futures (BIT)
Coinbase is set to launch “nano” bitcoin futures next week. The announcement was made on Coinbase’s derivatives site, which was formerly known as FairX. The futures will be a fraction of a bitcoin, priced at 1/100th. They will be available for trading through leading third-party brokers and clearing firms. When they are approved by regulators, the company plans to offer them directly.
The new product is designed to provide all of the benefits of a conventional bitcoin futures contract with the convenience and accessibility of a retail product. Coinbase believes that a broader audience and more accessible futures products will unlock significant growth in the US regulated crypto futures market. The company plans to make futures accessible to the broadest possible audience by introducing a new product. The company’s mission is to make trading in crypto as easy as possible for everyone.
It will be less expensive than traditional bitcoin futures
Traditionally, a futures contract is a derivative of an underlying cryptocurrency. For example, a Bitcoin future is a contract based on the average of five spot markets at a designated moment in time. Its price may be lower or higher than this average if traders observe pre-set orders. However, the futures contract may be less expensive if retail traders are able to purchase large quantities.
The Coinbase direct listing has brought crypto into the mainstream and given the company an edge in the financial services industry, which is trying to reinvent itself. However, some analysts wonder whether Coinbase will be another Bitcoin Netscape, which launched in the 1990s and sparked a dot-com stock boom with its share offering. Despite the price difference, the company has more assets under management and liquidity than its rivals. This means superior pricing and trade execution.
It will offer integrated secure asset storage and fraud prevention
In an SEC filing, Coinbase complained that its offshore rivals were taking their customers’ crypto assets and funds elsewhere. This gives the platform an advantage in the rapidly evolving financial services industry. If Coinbase can successfully navigate changing regulatory regimes and build a strong reputation, it may turn out to be another Netscape, the internet browser sensation that ignited the dot-com stock frenzy in the 1990s. However, Microsoft’s Internet Explorer eventually sunk it.
The launch of the new cryptocurrency lending product was delayed after the SEC issued warnings that the product constituted an unregistered security. Fortunately, the EU has no such regulation. Coinbase’s first crypto derivatives product will offer integrated secure asset storage and fraud prevention. As brokerages expand their services into the crypto market, Coinbase’s fees may need to compress.
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