The derivatives arm of Coinbase, the largest US cryptocurrency exchange, plans to launch futures trading contracts for Dogecoin (DOGE), Litecoin (LTC), and Bitcoin Cash (BCH) by April 1, 2024.
Coinbase Derivatives plans to begin offering monthly cash-settled and margin futures contracts for cryptocurrencies after April Fools’ Day, according to letters filed with the U.S. Commodity Futures Trading Commission (CFTC) earlier this month. .
DOGE, LTC, BCH futures trading
According to Coinbase's letter, the company plans to list its futures contracts using a self-certification approach under CFTC Regulation 40.2(a). This route allows companies to launch new products without his CFTC's direct approval. However, you must ensure that your products comply with the Commission's Commodity Exchange Act and Regulations.
In a letter, Coinbase Derivatives outlined the contract's description, size, and structure, and revealed that the settlement method would leverage benchmark rates from MarketVector.
This latest development is considered a remarkable feat for Dogecoin, which started as a joke but has now evolved into one of the top-ranked meme coins, playing in the major leagues alongside big-cap altcoins.
“Despite its origins as a meme, Dogecoin has achieved a significant market capitalization and has become one of the top cryptocurrencies by market value at various points in time. Dogecoin remains popular and has an active community support suggests that Dogecoin has surpassed its origins as a meme and become a staple in the cryptocurrency world,” Coinbase said in one of its letters.
Commodities vs. Securities Futures
Bloomberg analyst James Seifert said Coinbase's move is interesting. He wondered if the Securities and Exchange Commission (SEC) would object to the product being classified as a commodity futures rather than a securities futures.
Seifert said Dogecoin, Litecoin and Bitcoin Cash are based on Bitcoin, which the SEC classifies as a commodity, so the new contract is a security, especially after the SEC's approval of the Spot BTC exchange-traded fund. He explained that it would be difficult to make that claim. He added that the nature of DOGE, LTC, and BCH may be the reason why Coinbase chose them.
“Honestly, if the SEC had worked with industry and created rules on this, this wouldn't have happened. But it also makes my job a lot less fun,” Seifert said. he added.
