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Coinbase Global has won approval to offer cryptocurrency futures in the U.S., a rare regulatory win for the crypto broker that will allow it to tap the largest market in digital assets and more directly compete with Binance, the worlds largest token exchange.

Coinbase (ticker: COIN) announced Wednesday that it had received the green light to offer federally regulated crypto futures to eligible U.S. customers on its platforms. Approval comes as a long-awaited nod from the National Futures Association (NFA), with whom Coinbase filed in September 2021 to become a futures commission merchant (FCM). FCMs play a key role, like a broker, in derivatives markets, including extending leverage, or borrowed money, to traders.

Acceptance from the NFAa self-governing body for the futures industry designated by the Commodity Futures Trading Commission (CFTC), the federal derivatives regulatoris a rare win for Coinbase, and crypto at large. The industry has come under intense regulatory scrutiny over the past year and Coinbase is no exception, charged by the Securities and Exchange Commission (SEC) with operating an unregistered securities exchange, which it has denied.

Coinbase said that its approval as an FCMwhich it called a critical milestonemakes it the first crypto-native company to directly offer traditional spot crypto trading alongside futures products. CME and CBOE, stalwarts of traditional finance, already offer trading in Bitcoin and Ether futures.

Expanding into the futures space has the potential to allow Coinbase to tap into demand for cryptos most popular product: Bitcoin perpetual futures, which have the most liquid market in the digital asset economy. Coinbase highlighted that the global crypto derivatives market represents some 75% of all trading volumes.

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Offering leveraged futures may also help bring feisty retail traderswho have stood at the center of Coinbases trading businessback into the fold. Many retail investors have headed for the hills and abandoned crypto since the beginning of a brutal bear market last year, with lackluster volatility in recent months doing little to lure them back.

The push into derivatives will, at least, put Coinbase into even closer contention with Binance, the worlds largest crypto exchange and an offshore behemoth. Binance hosts the worlds largest crypto futures market and reaps significant profit from offering large amounts of leverage to traders, many of whom trade small and highly volatile tokens. Its unclear the extent to which Coinbase will offer leverage and for which products it will offer derivatives, though Bitcoin and Ether are likely among them.

Coinbase did not immediately respond to a request for comment from Barrons.

Shares in Coinbase were up 1% on Wednesday, outpacing Bitcoin, which was down 1% over the past 24 hours, as well as the S&P 500,

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Since the global crypto derivatives market can be three to four times larger than spot, this approval increases Coinbases total addressable market, Dan Dolev, an analyst at Mizuho Securities, wrote in a Wednesday note. But there are some key caveats.

Dolev is a Coinbase bear, rating the stock at Underperform with a $27 price target far below Wednesdays opening level of $82.51.

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For one, Dolev said, there may be cannibalization risk. Coinbase bought regulated derivatives exchange FairX last year, renaming it Coinbase Derivatives Exchange and funneling business to it through third-party brokers. Also, perhaps crucially, offering futures could pressure the fees at the heart of the spot trading business, Dolev said, noting that derivatives tend to have lower fees than spot.

For now, at least, investorswho have already driven Coinbase stock up 125% this yearare looking past those worries.

Write to Jack Denton at jack.denton@barrons.com

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Coinbase Gets Approval to Tap Cryptos Biggest Market in Faceoff With Binance - Barron's

The year 2022 could not have been better for the worlds largest cryptocurrency exchange,Binance.

Crypto markets were coming off an all-time high, and the November implosion of rival exchangeFTX, Binances biggest competitor, left the platform alone at the top of the digital asset market.

[F]or now, all Ill say is: well played; you won,tweetedFTX Co-founderSam Bankman-FriedNov. 10, 2022, the day before his multibillion-dollar crypto empire filed for bankruptcy amid a self-inflicted and allegedly criminal solvency crisis.

Then 2023 came and everything changed.

Bankman-Fried wasarrested, extradited from the Bahamas, and now resides in a United Statesjailawaiting criminal trial this October.

Rather than being able to capitalize on FTXs collapse and win market share, Binances own borderless crypto empire instead became the target ofregulatorsaround the world who feared its business model similarities to FTX could be obscuring similar questionable practices.

TheSecurities and Exchange Commission(SEC)filed 13 chargesagainst Binance and its founder,Changpeng Zhao, in June, alleging a variety ofsecurities law violationsand claiming the platform engaged in an extensive web of deception.

Binance has been accused of illegally serving American customers, inappropriately controlling clients assets, and disregarding compliance and anti-money laundering (AML) standards.

Unidentified former company insiders have said the cryptocurrency exchange mixedcustomer fundswith its own revenue the very same bad behavior that took down FTX.

Now, the company is shutting down itsBinance Connectservice, which launched in March 2022 to help companies become crypto-ready and accept payments in crypto, as well as filing for aprotective orderagainst the SEC.

But will the defensive measures pay off?

Read also:Crypto Wilts in Summer Heat as SEC Charges Both Binance and Coinbase

We allege that Zhao and the Binance entities not only knew the rules of the road, but they also consciously chose to evade them and put their customers and investors at risk all in an effort to maximize their own profits,Gurbir S. Grewal, director of the SECs Division of Enforcement, said in the agencyspress releaseannouncing the charges.

It is a statement that some believe could be leveled at nearly any player in the crypto sector, as the industrys reputation as a lawless Wild West ofdigital innovationwas what drew in, and appealed to, many of the sectors most ardent enthusiasts.

The crypto community believed and had a real conviction what they were doing was so new that existinglawscould not possibly apply,Amias Gerety, partner atQED Investors, told PYMNTS. And in the history of financial services, theres basically never been a group of people with any commercial success who had that conviction.

[O]nce you have that conviction, then you start searching for excuses not to comply [with the law], he added.

SEC ChairmanGary Genslersaid May 15 at theFederal Reserve Bank of AtlantasFinancial Markets Conference: [Crypto] business models tend to be built on taking customer funds,comminglingit.

Binance, for its part, described the SECs attack as stunningly overbroad and unduly burdensome requests in acourt orderfiled Monday (Aug. 14).

Binance, Zhao and former Chief Compliance Officer Samuel Lim are also facing alawsuitfrom theCommodity Futures Trading Commission(CFTC), which claims the company was operating in violation of the Commodity Exchange Act and related regulation.

The CFTCs suit, filed in March, described Binance as an illegal exchange with a sham compliance program.

In amotion to dismissthe case last month, Binance argued that its holding company is located in the Cayman Islands, and Zhao is a Canadian citizen, meaning the CFTCs claims should be dropped.

Binance did not immediately reply to a request for comment from PYMNTS.

Zhao has repeatedly dismissed his enterprises ongoinglegalwoes as FUD, or fear, uncertainty and doubt, even going so far as to tweet the number 4 in reference to what he sees as unnecessary FUD.

For an industry whose early and rapid growth was aided by a haze of regulatory uncertainty, cryptos future particularly within the U.S. remains unclear as the newness wears off.

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Binance Connect Shutdown Highlights Crypto's Ongoing Identity Crisis - PYMNTS.com

Binance recently released its newest Proof of Reserves (PoR) report causing the Binance Coin (BNB) to rise (although this could be due to other market conditions).

Meanwhile, emerging hybrid exchange Tradecurve (TCRV) is also working towards implementing its own PoR. As a result, it claims that it solidifies its commitment to transparency and building trust with its user base.

The largest crypto exchange in the world, Binance, has released its most recent Proof of Reserves (PoR) report, revealing its current digital asset holdings. Moreover, the platforms data indicates that the exchanges PoR was examined on August 1 at 0:00 UTC.

With reserve rates ranging from 101.62% to 117.99%, Binances PoR report shows that the exchanges reserves are much higher than the net balance of its customers for all the listed cryptocurrencies.

This reportedly demonstrates that Binance has more than enough cash to cover prospective customer withdrawals. However, this may not necessarily be the case.

Following platforms like Binance, Tradecurve (TCRV), a hybrid exchange, is working on implementing its own PoR. The need for transparent and verifiable proof of reserves becomes paramount as the platform gains traction and attracts more users.

Tradecurves hybrid infrastructure architecture combines the greatest features of CEX and DEX. Furthermore, it taps into many flourishing markets.

For example, the ETF market was worth $202.53B in June 2022. By allowing all derivatives to be traded on one account, Tradecurve enables users from all over the globe to enter this booming market.

In addition, one of the significant drawbacks of many exchanges is the intrusive and time-consuming KYC verification process.

Tradecurve claims that it eliminates this hassle by eliminating these requirements and allowing the creation of an account using email only. Thus, traders can operate in complete privacy and anonymity.

TCRV operates as the native utility token of the Tradecurve platform.

Its worth noting that Binance revenues may be declining rapidly, according to an extensive report. The exchange is also being sued by US regulators for a wide range of major issues.

See more here:

Binance Releases Proof Of Reserves Report | Crowdfund Insider - Crowdfund Insider