- Coinbase plans to introduce futures contracts for Shiba Inu and other cryptocurrencies pending regulatory approval, expanding trading options for investors.
- The move aims to accommodate increased market interest and manage volatility in cryptocurrency futures.
Coinbase Expands Horizons with Crypto Futures Contracts
Coinbase Derivatives is set to make waves in the cryptocurrency market as it moves to list futures contracts for Shiba Inu (SHIB) and several other major cryptocurrencies. This strategic move, detailed in an application to the Commodity Futures Trading Commission (CFTC) on June 28, 2024, is poised to launch by July 15, pending approval.
In addition to Shiba Inu, Coinbase aims to offer futures contracts for Polkadot (DOT), Stellar (XLM), Chainlink (LINK), and Avalanche (AVAX). If approved, this will bring the number of regulated crypto futures on Coinbase to eight, expanding the range of investment opportunities for traders.
The Shiba Inu futures contract is designed to be a monthly cash-settled and margined contract, sized at 10 million SHIB per contract. With Shiba Inu’s current price and supply dynamics, the minimum tick size and tick value are set at $0.00001 per SHIB and $0.10 per contract, respectively. This move will see Shiba Inu join Dogecoin (DOGE) as another memecoin with a regulated futures contract, signifying the growing acceptance and integration of memecoins into regulated financial markets.
Managing Volatility in Crypto Futures
Coinbase acknowledges the inherent volatility of Shiba Inu due to its low market cap and memecoin status. However, the exchange is confident in its ability to manage high-volatility environments, drawing on its experience with existing commodity contracts like Bitcoin and oil. The application emphasizes that the futures contract will adhere to all core principles outlined in the Commodity Exchange Act (CEA), ensuring it is not readily subject to manipulation and does not disrupt the market. To prevent excessive speculation, the maximum number of positions allowed in the contract is limited to 30,000.
Coinbase is leveraging the CFTC Regulation 40.2(a) self-certification process for this application. This strategy allows designated contract markets (DCMs) like Coinbase Derivatives to list new products without the CFTC’s direct vetting, provided they comply with the CEA and CFTC regulations. By adopting this approach, Coinbase aims to streamline the process of bringing new futures contracts to market.
The self-certification strategy has been effective for Coinbase in the past. The exchange rebranded to Coinbase Derivatives in 2022 after acquiring FairX and received approval from the National Futures Association in 2023. This track record of successful regulatory navigation positions Coinbase well for the approval of its new futures contracts.
Coinbase Derivatives is set to become the first futures exchange in the US to introduce CFTC-regulated margined futures contracts for AVAX, LINK, DOT, XLM, and SHIB. This development provides participants and their clients with more access points, allowing for better risk management and speculation on price movements with reduced upfront capital requirements.
Shiba Inu (SHIB) has seen a significant surge in the last 24 hours, rising by 15%. This sharp increase follows a recent dip, where SHIB found support at $0.0000127 before rebounding to $0.00001538. The recent uptick in SHIB’s price has been driven by increased activity from large holders, known as “whales.” Data from IntoTheBlock shows a 197% inflow surge, contributing to the price boost and reflecting improved market sentiment.
