Coinbase May Introduce Futures on Shiba Inu Next Month

Coinbase Derivates has filed an application with the Commodity Futures Trading Commission (CFTC) to include futures on Shiba Inu on its platform.

In the application letter dated June 28, 2024, Coinbase aims to provide the service by July 15.

The US-based crypto exchange has also applied to list 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 application, the Shiba Inu (SHIB) futures contract will be a monthly cash-settled, margined contract, with a size of 10 million SHIB due to the price and supply of the token. The minimum value amounts will be $0.00001 per SHIB token and $0.10 per contract, respectively.

When listed, Shiba Inu will join Dogecoin as another meme token with a regulated futures contract. Coinbase acknowledged the token’s volatility, which stems from its low market capitalization and its status as a meme coin, but noted that it has successfully managed such volatility in existing products. The exchange said:

Since its launch, the exchange has experienced numerous instances of successfully managing high volatility environments in its existing commodity contracts, with Bitcoin volatility of over 4% and oil volatility of over 5% in 2022.

Furthermore, the filing describes how the futures contract will comply with all the core principles of the Commodity Exchange Act (CEA), ensuring that it will not be easily manipulated and cause market turmoil. The maximum number of positions in the contract is limited to 30,000.

Despite the news of the impending listing on a regulated exchange, SHIB’s price has risen marginally by 0.07% in the last 24 hours. Blockchain analytics firm Santiment reported that the meme token is one of the most undervalued digital assets based on average returns to the trader.

Coinbase uses CFTC Regulation 40.2(a) for its application. This process allows designated contract marketplaces (DCMs) like Coinbase Derivatives to list commodity products for trading without going through the CFTC’s vetting system, provided the product does not violate the CEA or other CFTC regulations.

Using this strategy, Coinbase can list futures contracts for crypto products by filing an application and waiting for the deadline to pass without CFTC objection. Coinbase acquired FairX in 2022, rebranding it to Coinbase Derivatives, and received approval from the National Futures Association in 2023.

Alexander Stefanov