TL;DR
- Coinbase files letters to the CFTC highlighting future contracts for Bitcoin Cash, Litecoin, and Dogecoin.
- If these future contracts are approved, they will allow traders to speculate on crypto prices without owning the underlying assets.
Coinbase Derivatives plans to launch cash-settled futures contracts for Dogecoin (DOGE), Bitcoin Cash (BCH), and Litecoin (LTC).
Coinbase submitted three letters to the U.S. Commodity Futures Trading Commission (CFTC) and may begin trading as early as April 1, 2024.
The letters highlighted the exchange’s intention of listing future contracts using self-certification.
With this method in place, Coinbase may list future contracts without waiting for direct approval.
However, the crypto exchange must ensure the products adhere to the CFTC’s regulatory guidelines.
Coinbase’s eyebrow-raising move to pursue futures listings for named cryptocurrencies may have implications for their regulatory classification.
If approved, Coinbase will provide exposure to the price action of these three cryptos without needing to own underlying assets.
With this in play, the crypto exchange will attract many traders to its platform.
Strategic Move for Commodity Classification
To justify Dogecoin’s future product, Coinbase reiterated in the letter that memecoin had transcended its origin as a joke.
They’ve become mainstream and a foundational element of the crypto industry.
Coinbase added that Dogecoin’s enduring popularity and active community support are evidence of its established position in the crypto sphere.
Market watchers see Coinbase’s move as a strategic play to force the US SEC to classify these assets as commodities, not securities.
Moreover, Coinbase’s choice of CFTC over the SEC is notable but, again, understandable. For one, the SEC’s views on crypto exchanges attempt to write off the security title.
Additionally, the CFTC has an impressive track record of being more lenient than the SEC.
Bloomberg ETF Analyst James Seyffart reacted to the announcement. He reiterated that the three cryptocurrencies are based on the same proof-of-work consensus mechanism as Bitcoin.
The US SEC recently approved Bitcoin for spot ETFs; therefore, the regulatory watchdog would have difficulty arguing that the three cryptos are securities.
The Three Coins Experience Above-Average Price Gains
Following the news, the mentioned cryptos experienced a significant upsurge in price.
Dogecoin (DOGE) increased by roughly 17% on March 21, 2024, after experiencing a correction in the previous days.
Impressively, Bitcoin Cash (BCH) registered a sharp $15% surge on March 21, 2024, notably outperforming its peers.
Litecoin’s (LTC) price performance has been in line with the rest of the crypto market, with its increment at around 7.8%.
The three tokens experienced above-average price gains compared to the overall crypto market’s 6.2$ increase.
The bold step by Coinbase reflects its confidence in the demand for such instruments in the crypto market.
Evidently, it also sets the stage for a potential clash between Coinbase and regulatory bodies about the classification of digital assets.
Will the CFTC approve Coinbase’s future contracts for Litecoin, Dogecoin, and Bitcoin Cash?
