Coinbase’s subsidiary, Coinbase Derivatives, has submitted an application to the Commodity Futures Trading Commission (CFTC) to include Shiba Inu (SHIB) futures on its platform.
In the application letter dated January 15, 2024, Coinbase plans to offer the service by January 31, 2024.
The US-based cryptocurrency exchange has filed the application to list four other altcoins on its futures contract list: Polkadot (DOT), Stellar (XLM), Chainlink (LINK), and Avalanche (AVAX). If these applications are approved, the total number of regulated cryptocurrency futures available on Coinbase will increase to eight.
According to the filing documents, Shiba Inu (SHIB) futures will be monthly contracts settled in cash and margin, with a size of 100,000 SHIB. The minimum value size of each SHIB token is $0.00001, and the minimum value size per contract is $0.10.
After listing, Shiba Inu will join Dogecoin as another meme token with regulated futures contracts. Coinbase acknowledges the volatility of these tokens due to their low market capitalization and meme status but notes that it has successfully managed similar volatility in its existing products. The exchange states:
“Since its inception, the exchange has numerous instances of successfully managing high volatility environments in existing commodity contracts, with 2022 volatility for Bitcoin above 4% and volatility for oil above 5%.”
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Additionally, the application describes how the futures contracts will comply with all the core principles of the Commodity Exchange Act (CEA), ensuring they are not easily manipulated and do not cause market disruptions. The maximum position limit for the contract is set at 30,000.
Despite the news of an upcoming listing on a regulated exchange, the price of SHIB has seen a modest 24% increase in the past 24 hours. According to blockchain analytics firm Santiment, meme tokens are among the most undervalued digital assets based on average trader returns.
Coinbase is using CFTC Rule 40.2(a) for application. This process allows designated contract markets (DCMs) like Coinbase Derivatives to list commodity products for trading without going through the CFTC’s approval system, provided the product does not violate the CEA or other CFTC regulations.
By using this strategy, Coinbase can register futures contracts for cryptocurrency products by submitting applications and waiting for the deadline to pass without facing any opposition from the CFTC. Coinbase acquired FairX in 2022, renamed it Coinbase Derivatives, and obtained approval from the National Futures Association in 2023.
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