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Coinbase Applies To Register As Futures Commission Merchant

Coinbase Applies To Register As Futures Commission Merchant

US-based crypto exchange Coinbase is looking to register as a Futures Commission Merchant (FCM) and has filed its application with the National Futures Association (NFA) for the same. 

Futures And Derivatives Trading Might Come To Coinbase

According to the announcement made on Twitter, Coinbase is eager to broaden its offerings and develop the overall crypto-economy. The crypto exchange wants to start offering futures and derivatives trading on its platform by registering as an FCM, which comprises trading in futures or options for payment of money or other assets from clients. 

As of now, the application status for Coinbase Global on the NFA website is still pending. Once approved, the next step would be to register with the Commodity Futures Trading Commission (CFTC). After that, the exchange would need to apply for a specific product or fund with the Securities and Exchanges Commission (SEC). 

Coinbase’s ‘SEC’ Problem

However, SEC’s tough stance against the crypto industry and exchanges has already created problems for Coinbase. Just last week, the crypto exchange released a blog post talking about the SEC’s decision to sue Coinbase over its latest initiative, Lend. Through the write-up, Paul Grewal, Coinbase’s Chief Legal Officer, explains that they have received a “Wells notice” about their upcoming Lend program. Grewal also explained that a “Wells notice” is a letter the SEC sends to inform people or firms that it intends to sue them in court. However, Grewal was explicit in mentioning that they still have no clue of the reason behind the SEC’s decision to sue. 

It seems that the financial regulator is unhappy with the Lend program, which offers a 4% annual return on USDC deposits for US customers, claiming that it violates securities laws.  Coinbase CEO Brian Armstrong has called out the SEC over the decision to sue, questioning the lack of clarity on crypto regulation. 

Coinbase’s Global Crypto Dominance

The crypto exchange has been in the news a fair bit lately, mostly because of its aggressive expansion approach. Most recently, Coinbase Global had announced that it is offering senior notes in a private sale being managed by the Goldman Sachs Group. The exchange is hoping to secure a $1.5 billion offer to help boost its balance sheet and establish widespread crypto adoption in a crypto-strict environment. In addition, back in August, the company had spoken about its $4 million safety fund that it had set aside to be used in the event of regulatory scrutiny, crypto industry risks, and the possibility that the sector might enter an extended bear market. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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