As the cryptocurrency market matures, institutional and retail traders are seeking advanced tools, robust infrastructure, and regulatory clarity to execute sophisticated strategies. Coinbase (NASDAQ:COIN) is meeting these demands with significant updates to its Coinbase Prime and Coinbase Futures offerings.
Recent updates highlight how Coinbase is positioning itself as a platform for hedge funds and retail traders, offering enhanced trading capabilities, deeper liquidity, and features tailored to the cryptoeconomy.
Recently, Coinbase explained why hedge funds are increasingly turning to Coinbase Prime, its institutional-grade prime brokerage platform.
Designed to meet the needs of sophisticated investors, Coinbase Prime integrates trading, financing, and custody into a single, seamless solution.
This platform addresses the complexity of advanced crypto strategies, making it a go-to choice for some of the world’s largest hedge funds and asset managers.
Hedge funds are drawn to Coinbase Prime for its infrastructure.
At its core is Coinbase’s NYDFS-qualified custodian, which ensures asset protection through cold storage and operational controls.
Over the past year, Coinbase has rolled out upgrades like Portfolio Margining across more than 85 assets, a rules-based risk methodology, and reliable access to stable borrow workflows.
These features support a range of strategies—directional, market-neutral, and fully automated quant—while minimizing operational risk.
The platform’s liquidity is another draw, combining Coinbase Exchange with curated third-party venues selected for market depth and counterparty quality, ensuring best execution.
Additionally, Coinbase Prime’s staking offering now includes Ethereum (ETH) for US institutional clients, allowing them to generate yield securely.
Staked ETH and accumulated yield are held in Coinbase’s cold storage custody vault, with transactions requiring consensus for added security.
This move aligns with Ethereum’s shift to Proof-of-Stake, where staked ETH (denoted as ETH2 during the transition) maintains identical pricing to ETH, with tickers set to merge post-upgrade.
On the retail side, Coinbase Financial Markets (CFM) is enhancing futures trading with its Spring 2025 update.
The update introduces 24/7 trading for Bitcoin (BTC) and Ethereum (ETH) futures, a significant leap from the previous Sunday-to-Friday schedule.
This change aligns futures trading with the always-on nature of crypto spot markets, giving US traders the flexibility to manage positions anytime, enhancing risk management and strategy execution.
Coinbase Advanced users will soon gain access to perpetual-style BTC and ETH futures, a product for the US market.
Unlike traditional futures with fixed expirations, perpetual futures allow traders to hold positions indefinitely, mirroring global crypto derivatives markets while adhering to US regulatory standards.
This responds to strong demand for crypto derivatives, which account for over 75% of global crypto trading volume.
CFM is also expanding its contract offerings, introducing new crypto contracts like Solana (SOL) and XRP, alongside non-crypto contracts such as silver and, soon, equities.
These nano-sized contracts (1/100th of a Bitcoin, 1/10th of an Ethereum) lower the capital barrier, making futures accessible to a broader range of retail traders.
New tools like auto-sweeping of excess funds, auto-rolling of expiring positions, and order types like Take Profit/Stop Loss (TP/SL) and Time-Weighted Average Price (TWAP) further streamline the trading experience.
A forthcoming margin health measure will help traders monitor liquidation risk more effectively.
Both Coinbase Prime and Coinbase Futures emphasize regulatory compliance.
Coinbase Financial Markets, a member of the National Futures Association (NFA) and subject to CFTC oversight, ensures futures trading meets stringent standards.
However, trading futures involves substantial risks, particularly with leverage, where losses can exceed initial investments.
Coinbase advises traders to thoroughly understand these risks and review the CFM Futures Risk Disclosure Statement.
Funds held with Coinbase Inc., used for spot trading, do not benefit from CFTC protections, and access to these products may vary by jurisdiction.
Coinbase’s updates signal a step toward bridging the gap between traditional finance and the cryptoeconomy.
For hedge funds, Coinbase Prime offers a sophisticated, secure platform to execute complex strategies.
For retail traders, Coinbase Futures delivers accessible, innovative tools to navigate the dynamic crypto market.
As Coinbase continues to expand its offerings—potentially integrating futures trading into its mobile app and adding more contract types—it is poised to enable the next generation of global crypto derivatives.