- Despite offering lower rates, Coinbase didn’t receive the best deal.
- Coinbase has applied to become a registered futures commission merchant.
Coinbase is the market’s second crypto-related junk bond issuer. Software company MicroStrategy Inc. issued $500 million of notes in June to buy Bitcoin. It is a crypto brokerage, and exchange, planning to use the extra cash for product development and acquisitions.
Despite being able to lower its rate, Coinbase didn’t receive the best deal. The new debt was below investment grade. Bloomberg bond indexes show similar grade debt yielding 2.86 percent on average.
Because years of crypto hype are now — and quickly — becoming widespread acceptance. Thus, spending a little more to have funds on hand to drive new projects may not be a terrible idea.
Coinbase has applied to become a registered futures commission merchant with the National Futures Association. So the exchange wants to go beyond spot trading (exchanging one asset for another) to the lucrative derivatives sector. Where individuals may gamble on future values.
Trading Derivatives is a Huge Sector
Any company selling to people must register with the Commodity Futures Trading Commission. Which regulates all derivative goods in the US. To do so, they must first be NFA members since the NFA conducts registration on behalf of the agency.
Trading derivatives is a huge business in both conventional and crypto markets. Binance’s futures volume exceeds its regular exchange by 3 to 1. The difference is much more significant on FTX, a worldwide exchange heavily marketed in the US (where its more minor American affiliate is also seeking to offer derivatives trading).
According to reports, these and other rivals (including the primarily unregulated Deribit) have established a roughly $150 billion market for crypto derivatives. While it may be the king of the American spot exchanges, it has chosen to stop giving up exotic territory.
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