Coinbase Seeks to Introduce Shiba Inu Futures Alongside Four Other Altcoins

Coinbase Derivatives, a prominent US-based cryptocurrency platform branch, has formally requested permission from the Commodities Futures Trading Commission (CFTC) to offer futures contracts for Shiba Inu and four additional altcoins. 

Announced on June 28, 2024, the exchange aims to have Shiba Inu futures available by July 15. This move would expand its assortment of regulated cryptocurrency futures to eight.

Expansion of cryptocurrency futures

Alongside Shiba Inu, Coinbase is poised to introduce futures for Polkadot’s DOT, Stellar’s XLM, Chainlink’s LINK, and Avalanche’s AVAX. Approving these listings would significantly increase the diversity and scope of Coinbase’s future offerings. 

The proposed Shiba Inu futures will be monthly cash-settled contracts requiring a margin, with a contract size of 10 million SHIB, reflecting the coin’s pricing and supply structure. The minimum price fluctuation will be $0.00001 per SHIB, with each tick valued at $0.10.

Managing volatility and compliance

Coinbase has highlighted its capability to manage the high volatility often associated with cryptocurrencies like Shiba Inu, which it categorizes alongside Dogecoin as another memecoin in the regulated futures space.

Despite Shiba Inu’s lower market cap contributing to its volatility, Coinbase has cited its historical success in handling fluctuations in other commodities, including Bitcoin and oil, as a testament to its robust risk management framework.

 Additionally, the application assures that the futures will adhere to all fundamental requirements of the Commodities Exchange Act (CEA), including safeguards against manipulation and market disruption, with a stipulated maximum position limit of 30,000 contracts.

A strategic approach to futures listing

Coinbase navigates the regulatory landscape using a self-certification strategy under CFTC Regulation 40.2(a). This procedure allows designated contract markets like Coinbase Derivatives to introduce commodity products by demonstrating that these offerings do not contravene existing CEA regulations. 

By following this route, Coinbase can expedite the listing process, providing the CFTC only raises objections before the established deadline. This approach was made possible following the acquisition and rebranding of FairX in 2022, coupled with obtaining necessary approvals from the National Futures Association in 2023.

The market reaction has been tepid despite Coinbase’s proactive steps to expand its derivatives offerings. Shiba Inu’s value dipped by nearly 2% on the announcement day. 

However, blockchain analytics firm Santiment has indicated that Shiba Inu still holds potential as one of the most undervalued digital assets based on average trader returns. As Coinbase continues to broaden its derivatives market, it remains to be seen how these new futures contracts will influence the trading dynamics and valuation of Shiba Inu and the other altcoins involved.

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