Coinbase Derivatives Exchange To Offer Institutional Bitcoin And Ether Futures
Coinbase Derivatives Exchange, the regulated futures offering by crypto exchange Coinbase, is reportedly launching bitcoin (BTC) and ether (ETH) tracked futures for institutional clients on June 5th.
Coinbase said it created these products to cater to increased institutional demand following the issuance of its nano Bitcoin (BIT) and nano Ether (ETI) contracts last year.
The exchange stated,
“BTI and ETI futures, sized at 1 bitcoin and 10 ether per contract, respectively, will enable participants to tailor their exposure to these growing digital asset commodities with granularity, allowing traders to seize opportunities in a highly dynamic market environment.”
At current prices, BTI and ETI are worth $30,000 and $20,000 in notional value respectively.
Coinbase said BTC and ETI are offered at “significantly lower fees” compared to traditional offerings, although these fees were not mentioned as of Friday.
Crypto derivatives markets are a popular, albeit mostly unregulated market among participants with over $134 billion in notional volume traded across exchanges in the past 24 hours, data shows, with bitcoin and ether tracked products amounting to over $25 billion of these volumes.
Key House Republicans UnveilCrypto Market Structure Draft Bill
Over the weekend, the Republican chairs of the United States House Financial Services Committee and House Agriculture Committee released a draft bill offering certain crypto assets a pathway to being labeled digital commodities.
Specifically, the framework under the proposed legislation would allow certain digital assets to qualify as digital commodities if they were “functional and considered decentralized.” It also required the SEC to provide a “detailed analysis” of any objections to such a classification.
Coinbase’s chief legal officer Paul Grewal has praised the draft bill stating that it “lays a strong foundation for regulatory jurisdiction and definitions.”
The 162-page draft bill will likely face long odds of getting the agreement form Democrats in Congress needed for it to become law… but it offers a glimpse into Republicans’ thinking on the issue after months of calling for a regulatory framework for digital assets.
Tokens offered as part of an investment contract would remain in the Securities and Exchange Commission’s remit, while those that qualify as commodities would be overseen by the Commodity Futures Trading Commission.
Whether or not an asset is a commodity would depend largely on whether a blockchain network is decentralized.
A network would be considered decentralized if it meets certain requirements, including that no person – during the previous 12 months – had unilateral authority to “control or materially alter” the function or operation of the network and that no token issuer or affiliated person owned 20% or more of the digital asset units outstanding.
Under the draft, a token issuer can certify to the SEC that the blockchain is sufficiently decentralized but the SEC can object. The agency has 30 days to make a decision, though it can seek one 90-day extension.
SEC Chair Gary Gensler has repeatedly said that most digital assets are securities and that new rules aren’t necessary.
He said the issue isn’t lack of clarity but trading platforms’ unwillingness to abide by “existing regulations” – a stance that is backed by some Democrats on Capitol Hill.
The crypto industry has pushed back, however, claiming that current rules aren’t workable or clear and is asking Congress to step in.
The draft bill from the Republican chairs would offer guidance on how platforms can register at the SEC, CFTC or both, and would require the two regulators to jointly issue rules on definitions and oversight of dual-registered exchanges.
It also would provide a transition period while the regulators are working on rules to allow platforms to file a provisional registration statement with the SEC or CFTC.
At the same time, it would mandate studies on nonfungible tokens – NFTs – and on decentralized finance, or DeFi.
Crypto Policy Groups Call Tornado CashSanctions “Unprecedented and Unlawful”In New Legal Brief
The Blockchain Association along with DeFi Education Fund have reportedly filed a new amicus brief to support Coin Center’s case against the Treasury Department and its sanctions watchdog, the Office of Foreign Asset Control for its sanctioning of the Tornado Cash Protocol last year.
Blockchain Association CEO Kristin Smith stated,
“It’s critical to recognise that Tornado Cash is simply a tool – punishing the tool itself simply because it can be used by anyone, including bad actors, runs contrary to the values this country was founded upon,” adding, “Blockchain Association stands with Coin Center, advocating for the responsible and lawful use of blockchain technology. Regulatory actions should only be targeted at bad actors who abuse this tool for illegal purposes.”
Last year, the Treasury Department sanctioned Tornado Cash, the open-source software that can be used to anonymize transactions on the Ethereum blockchain. The move was met with pushback by crypto advocates, including the Washington, D.C. policy nonprofit Coin Center, which filed a lawsuit against the Treasury Department over the sanctions.
The Blockchain Association filed their legal brief in support of Coin Center’s case this week alongside DeFi Education Fund, a nonpartisan research and advocacy group.
Crypto Exchange Coinbase is backing another case targeting the department over the sanctions. The Blockchain Association has also filed an amicus brief in that case.
Both lawsuits argue that the government overstepped its authority by targeting software, rather than an individual or entity, among other issues.
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