Coinbase to Target Retail Traders with First Bitcoin Derivatives

Coinbase Derivatives Exchange, formerly FairX, is launching its first crypto derivatives product on June 27. Announced on Friday, it will be a nano Bitcoin futures (BIT) contract targeted at retail investors.

“Our BIT Futures contract will offer the same benefits [as regular futures contract] but is built with the retail trader in mind,” Coinbase stated.

“At 1/100th of the size of a Bitcoin, it requires less upfront capital than traditional futures products and creates a real opportunity for significant expansion of retail participation in US regulated crypto futures markets.”

Initially, the contracts will be available for trading on several leading broker intermediaries, including brokers like EdgeClear, Ironbeam, NinjaTrader, Optimus Futures, Stage 5 and Tradovate. It will also be available on clearing firms like ABN AMRO, ADMIS, Advantage Futures, ED&F Man, Ironbeam and Wedbush.

Meanwhile, Coinbase is seeking a futures commission merchant (FCM) license in the United States to offer margined products directly to its clients.

Coinbase is one of the leading crypto exchanges in the United States. Its crypto derivatives ambitions surfaced with its acquisition of FairX, which operates as a CFTC-regulated Designated Contract Markets (DCM) futures exchange, at the beginning of this year.

“The crypto derivatives market represents $3Tn in volume worldwide, and we believe that additional product development and accessibility will unlock significant growth,” the announcement added.

While many crypto trading giants offer crypto derivatives, only a few operate in the US market due to stringent regulations. The latest announcement came only after the American crypto exchange decided to shut its professional crypto trading platform, Coinbase Pro. Additionally, the exchange is facing community backlash with ongoing layoffs.

Though the publicly-traded stock price of the crypto exchange has decreased significantly since its market debut, it strengthened by more than 13 percent in the last trading session.