Coinbase’s subsidiary, Coinbase Derivatives, has submitted an application to the Commodity Futures Trading Commission (CFTC) to include Shiba Inu futures on its platform.
In the application dated June 28, 2024, Coinbase aims to provide the service by July 15.
The US-based crypto exchange has filed for the inclusion of futures contracts for four other altcoins: Polkadot (DOT), Stellar (XLM), Chainlink (LINK), and Avalanche (AVAX). If approved, the total number of regulated crypto futures available on Coinbase will increase to eight.
According to the statement, the Shiba Inu futures will be a monthly contract with cash settlement and margin, with a size of 10 million SHIB due to the token’s price and supply. The minimum value sizes will be $0.00001 for the SHIB token and $0.10 for the contract.
Once listed, Shiba Inu will join Dogecoin as another meme token with a regulated futures contract. Coinbase acknowledges the token’s volatility resulting from its low market capitalization and meme coin status but notes its successful management of similar volatility in existing products. The exchange stated:
“Since its launch, the exchange has had numerous cases of successful management of funds with high volatility in its existing stock contracts, with Bitcoin’s volatility being over 4% in 2022, and oil’s volatility over 5%.”
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Furthermore, the statement describes how the futures contract will comply with all major principles of the Commodities Exchange Act (CEA), ensuring it is not easily manipulated and does not cause market disruption. The maximum number of positions in the contract is limited to 30,000.
Despite the news of the upcoming listing on a regulated exchange, the price of SHIB has only increased by 0.07% in the last 24 hours. Blockchain analytics firm Santiment reports that the meme token is one of the most undervalued digital assets based on average trader returns.
Coinbase is using CFTC Regulation 40.2(a) for its application. This process allows designated contract markets (DCMs) like Coinbase Derivatives to list stock products for trading without going through the CFTC’s review system, provided that the product does not violate the CEA or other CFTC regulations.
By utilizing this strategy, Coinbase can register futures contracts for crypto products by submitting an application and waiting for the deadline to pass without objections from the CFTC. Coinbase acquired FairX in 2022 and rebranded it as Coinbase Derivatives, receiving approval from the National Futures Association in 2023. 