Coinbase Wins CFTC Approval for Derivatives Clearing, Bringing Listing, Brokerage and Clearing In-House

Coinbase has received approval from the U.S. Commodity Futures Trading Commission to operate a derivatives clearing organization, allowing it to handle the full chain of regulated derivatives activity in-house, from listing and brokerage to clearing.

The Block reported on September 29 that the CFTC approved the registration of Coinbase subsidiary Coinbase Clearing LLC as a derivatives clearing organization.

Coinbase already holds registrations as a futures commission merchant and a designated contract market. With the DCO approval, it can now manage the full process for fully collateralized derivatives, including product listing, customer brokerage and post-trade clearing.

For the first time, Coinbase can create and settle fully collateralized contracts directly, the company said. It added that the approval will accelerate product development, improve operating efficiency and provide flexibility to launch new regulated products in the future.

Still, products that Coinbase Clearing can clear directly are limited to fully collateralized futures, options on futures and swaps. Margin derivatives that use leverage will continue to rely on existing third-party clearing partners.

Coinbase also said some planned products, including single-stock perpetual futures, will continue to be supported through existing partners.