The new futures contracts will be sized at 1 bitcoin and 10 ether and will be available from June 5.
It’s been a rough year for US-based crypto providers, but that hasn’t stopped American exchange Coinbase from going full-steam ahead with its plans. Yesterday, the exchange announced that Coinbase Derivatives Exchange will launch two institutional futures contracts for Bitcoin and Ether on June 5.
The contracts, known as BTI and ETI futures, will be sized at 1 bitcoin and 10 ether per contract. This new offering comes in response to the growing interest and demand from institutional investors for advanced derivatives products, following the successful introduction of nano Bitcoin (BIT) and nano Ether (ET) contracts.
“We look to empower institutional participants with greater precision in managing crypto exposure, expressing directional views, or tracking Bitcoin and Ether returns in a capital-efficient way,” the exchange said.
Good to know
A futures contract is an agreement between two parties to buy or sell an asset at a predetermined price on a specified future date. It is essentially a standardized contract that obligates the buyer to purchase, and the seller to sell, the underlying asset at the agreed-upon price and date. Futures contracts are traded on specialized exchanges and are used by investors and traders to speculate on price movements, hedge against potential losses, or lock in future prices for the underlying asset.
Advantages of the BTI and ETI futures include lower fees, improved risk management and enhanced precision.
The announcement outlines that “in addition to risk management and enhanced precision, these institutional-sized contracts come with significantly lower fees than traditional offerings, enabling institutions to maximize their capital efficiency. By reducing trading costs, Coinbase Derivatives Exchange aims to create an environment that fosters greater accessibility and participation, ultimately benefiting the entire crypto ecosystem.”
The contracts will have a monthly expiry, USD settlement, and will accessible through major institutional FCMs and brokers.
Coinbase’s drive toward a derivatives exchange comes amidst a tense regulatory period. In April, the exchange filed a mandamus petition requesting federal courts to instruct the SEC to issue clear guidelines for crypto companies operating within the US.
In response, the SEC said that it’s in no rush to regulate crypto, outlining that “the Commission has limited resources, which it has appropriately directed to its robust regulatory and enforcement agenda, among other priorities.”
Nonetheless, a shareholder letter issued on May 4 reveals that Q1 of 2023 was a “turning point” for the exchange, with balances coming in much better than expected.
In Q1 of 2023, the company’s net losses fell from $557 million in Q4 2022 to $79 million, and net revenue increased by 22%.
You can read more about Coinbase’s new futures contracts on their blog.
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