Coinbase FCM? That’s Right, the Crypto Exchange Was Quietly Regulated In the U.S. In Blow to SEC

3 min readAug 23, 2023

Key takeaways

Coinbase has qualified as a futures commission merchant (FCM)
The move flies in the face of the SEC’s lawsuits into Coinbase’s alleged dodgy dealings
Coinbase’s share price was up 3% at the news

In a major win for crypto fans everywhere, crypto exchange Coinbase confirmed this week it had secured approval to offer crypto futures to U.S. retail customers. It’s a major win as the company fights for its life, with the SEC hot on the tail of any company trying to flout the rules. Let’s get into it.

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What’s happened with Coinbase?

Crypto exchange company Coinbase has gained approval to offer cryptocurrency futures to U.S. customers. The approval means Coinbase can offer bitcoin and ether futures directly to retail customers, whereas only institutional clients could do so before.

The approval, which the National Futures Association granted, flies in the face of the SEC regulatory probe that Coinbase currently faces. The NFA gave Coinbase operational rights nearly two years after the company applied, and it’s the first of its kind to get approval for being able to trade in the futures market.

Shares in Coinbase climbed 3% at the news. The stock has climbed 130% this year to date.

What does it mean for the markets?

The approval is a massive headache for the SEC, who filed a lawsuit against Coinbase in June this year. Anything that gives Coinbase more ammo would never go down well with the financial regulatory body that’s suing pretty much every major crypto company operating in the U.S. Coinbase has always denied the SEC’s allegations.

As for the futures themselves, the fact that Coinbase can also trade ether futures is another good sign that Ethereum is considered a commodity rather than a security — and, therefore, safe from regulatory scrutiny.

The global derivatives market represents around 80% of the entire crypto market, with futures bets driving volatility in the crypto world. Crypto derivatives trading volumes totaled about $1.85 trillion in July.

The bottom line

Crypto is always a crazy ride, but Coinbase officially qualifying as an FCM adds legitimacy to the entire crypto world — and Coinbase itself, which is under siege from the SEC. It also muddies whether the SEC has been too heavy-handed with its approach, though we doubt the regulatory body plans to drop its lawsuits any time soon.

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