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 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 add four other altcoins to its list of futures contracts: Polkadot (DOT), Stellar (XLM), Chainlink (LINK), and Avalanche (AVAX). If 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 of each SHIB token is $0.00001, and the minimum value of each contract is $0.10.
After listing, Shiba Inu will join Dogecoin as another meme token with regulated futures contracts. Coinbase acknowledges the token’s volatility due to its low market cap and meme status but notes its successful management of similar volatility in existing products. The exchange states:
“Since its inception, the exchange has numerous examples of successfully managing high volatility environments in existing commodity contracts, with volatility in Bitcoin exceeding 4% and volatility in oil exceeding 5% in 2022.”
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Furthermore, the application describes how the futures contracts will meet all the fundamental principles of the Commodity Exchange Act (CEA), ensuring they cannot be easily manipulated and will not cause market disruptions. The maximum position limit for the contracts is set at 30,000.
Despite the news of an upcoming listing on a regulated exchange, the price of SHIB has seen a slight increase of 24% 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 utilizing 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, as long as the product does not violate the CEA or other CFTC regulations.
With 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 US National Futures Association in 2023.
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