A rift in the financial market landscape is emerging as two prominent exchanges encroach upon each other’s established territories.
Coinbase Derivatives, a major U.S. cryptocurrency derivatives exchange, unveiled plans last week to introduce retail-sized futures contracts for oil and gold starting June 3.
In a press release, the company stated, “Following the successful introduction of futures for Bitcoin, Ethereum, Bitcoin Cash, Litecoin, and Dogecoin, we have observed a growing demand for retail-oriented products within a regulated and accessible exchange. Consequently, we are excited to broaden these offerings to include futures for gold and oil, facilitating cross-hedging opportunities across asset classes.”
The futures contracts will be structured around 10 barrels of oil and 1 troy ounce of gold, denoted by the tickers NOL for oil futures and GLD for gold futures.
“We view the expansion of our product suite to encompass futures on traditional commodities like oil and gold, alongside cryptocurrency commodities, as a logical progression. We anticipate the maturation of these contracts and the enhanced liquidity they will afford both retail and institutional investors in a regulated environment,” the cryptocurrency exchange remarked.
Coinbase’s futures initiative coincided with a report from the Financial Times revealing discussions within CME Group, the preeminent derivatives marketplace globally, regarding the launch of a spot Bitcoin market, marking a direct challenge to Coinbase.
The introduction of a spot crypto market by CME would complement its existing Bitcoin futures contracts, which, boasting an open interest of 31,000 contracts, represent one of the largest markets globally, usurping Binance’s title in 2023.
Sources with direct insight into the matter informed the Financial Times about the potential development, while CME declined to comment on the report.
Despite Coinbase’s prominence in the U.S. cryptocurrency exchange sphere, it confronts stiff competition in the broader futures market from CME, which boasts a nearly five-decade legacy with its gold futures.
The London Metals Exchange, renowned for its base metals offerings, struggled to compete with CME in the precious metals domain, ultimately shuttering its gold futures in July 2022 due to insufficient trading volume.
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