Coinbase to launch gold and oil futures in push to lure new traders - DLNews

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Coinbase Derivatives will launch retail-sized gold and oil futures on June 3.
The move comes after the exchange launched futures markets for Bitcoin Cash, Litecoin and Dogecoin last month.

Coinbase has long worked to position itself as the premier place for its US customers to trade crypto assets.

But now the crypto trading behemoth is swerving into oil and gold futures on its Coinbase Derivatives exchange due to what it calls “increasing demand” for such products.

According to a May 16 blog post, the new futures contracts are sized at 10 barrels of oil and one troy ounce of gold.

They will begin trading on June 3 and aim to offer Coinbase users enhanced trading opportunities in traditional markets.

“It is a logical extension for Coinbase,” as these futures can help sophisticated investors hedge their crypto positions, Owen Lau, an analyst at Oppenheimer & Co, told DL News.

The main Coinbase exchange this year launched other derivatives — adding 15 so-called perpetual futures — as the firm focuses on “gaining liquidity, building market share, and really establishing ourselves,” Chief Financial Officer Alesia Haas said on an earnings call earlier this month.

Lau said Coinbase Derivatives’ upcoming oil and gold futures will “increase the stickiness” of the exchange with traders.

In recent months, an increasing number of traditional financial firms, such as BlackRock, Fidelity and VanEck, have started offering crypto trading in traditional financial markets through exchange-traded funds, in addition to their existing range of commodities futures.

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Coinbase will not be the first crypto exchange to launch commodities futures offerings.

Crypto exchange FTX previously launched futures markets for several top-traded commodities, including crude oil and lumber, before it declared bankruptcy in November 2022.

More futures markets

Coinbase Derivatives launched in June last year and initially offered futures contracts for just Bitcoin and Ethereum. It is separate from the main Coinbase exchange and solely offers derivatives.

As a US-based derivatives exchange, Coinbase Derivatives is regulated by the Commodities and Futures Trading Commission.

Coinbase’s commitment to regulatory compliance is likely why it has taken a conservative approach to launching additional crypto futures markets.

But the exchange has ramped up its futures offerings in recent months. On April 1, it launched futures markets for Bitcoin Cash and Litecoin, then launched a market for Dogecoin futures on April 29.

Activity on the new markets has been muted.

Open interest for Dogecoin futures currently sits at just $621,000, compared to $17.8 million for its Bitcoin futures market.

“It takes time to build up the liquidity pool for any new entrant — Coinbase is not immune to it,” Lau said.

Tim Craig is a DeFi Correspondent at DL News. Got a tip? Email him at tim@dlnews.com.