Coinbase Derivatives, a subsidiary of Coinbase, 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 cryptocurrency exchange has filed for inclusion in the list of futures contracts for four other altcoins: Polkadot (DOT), Stellar (XLM), Chainlink (LINK), and Avalanche (AVAX). If these applications are approved, the total number of regulated crypto futures available on Coinbase will increase to 8.
According to the statement, the Shiba Inu futures will be monthly contracts 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.
When listed, Shiba Inu will join Dogecoin as another meme token with a regulated futures contract. Coinbase acknowledges the token’s volatility stemming from its low market capitalization and meme coin status but notes that it has successfully managed similar volatility in existing products. The exchange stated:
“Since its launch, the exchange has had numerous cases of successfully managing high volatility assets in its existing stock contracts, with Bitcoin volatility being over 4% in 2022 and oil volatility over 5%.”
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Furthermore, the statement describes how the futures contract will comply with all the key principles of the Commodity Exchange Act (CEA), ensuring that it will not be easily manipulated and will 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 trader returns.
Coinbase is using CFTC Regulation 40.2(a) for the application. This process allows designated contract markets (DCMs) like Coinbase Derivatives to list stock products for trading without going through the CFTC’s approval process, provided the product does not violate the CEA or other CFTC regulations.
By employing this strategy, Coinbase can register futures contracts for crypto products by submitting an application and waiting for the deadline to expire without objections from the CFTC. Coinbase acquired FairX in 2022, rebranding it as Coinbase Derivatives, and received approval from the National Futures Association in 2023.
