Key Takeaways:
- Coinbase launches regulated crypto derivatives for US traders via Deribit
- Crypto derivatives account for about 80% of global trading volume
- Compass Point warns of fierce competition and limited pricing power
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Coinbase targets 80% of crypto volume with US derivatives launch
Coinbase began offering regulated crypto derivatives to US customers through its Deribit subsidiary, targeting a market that accounts for about 80% of global crypto trading volume.
"Competition and low switching costs limit Coinbase's ability to exert pricing power relative to spot trading, particularly among more sophisticated users," analysts at Compass Point wrote in a note Monday, reiterating a sell rating and $140 price target.
Coinbase acquired Deribit for $2.9 billion last year. The exchange generated $50 million in first-quarter revenue from perpetual futures, though Compass Point flagged signs of cannibalization as retail trading revenue fell to its lowest since the third quarter of 2024. Shares of Coinbase fell 2.6% to about $184 on Monday.
The launch positions Coinbase to compete with offshore venues that have dominated crypto derivatives, but the company faces mounting competition from Kalshi, CME Group, Kraken and Robinhood. The CFTC's ability to approve US access to platforms like Hyperliquid or Binance represents a "growing risk," Compass Point said.
CME Group went live with 24/7 crypto futures trading on June 1, offering Bitcoin, Ethereum, Solana and XRP contracts at any hour. Kalshi received CFTC approval for Bitcoin perpetual futures the same day Coinbase announced its US expansion. Interactive Brokers has already integrated Kalshi alongside crypto exchange Bullish, while Kraken and Robinhood have announced plans to roll out perpetual futures soon.
Compass Point also highlighted the Trump family's connection with Binance through World Liberty Financial's USD1 stablecoin as a factor that "could also improve the likelihood of US access" following the exchange's $4.3 billion settlement with US authorities in 2023.
The derivatives push advances Chief Executive Officer Brian Armstrong's vision of Coinbase as an "everything exchange," broadening its product suite beyond spot trading. Derivatives typically generate higher trading volumes and more recurring transaction revenue, helping reduce earnings volatility across crypto market cycles.
This article is for informational purposes only and does not constitute investment advice.
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