Coinbase has unveiled a revolutionary derivatives product, the “Mag7 + Crypto Equity Index Futures,” due to launch on September 22.
This product is groundbreaking in that it will be the first U.S. listed futures product that offers exposure to traditional equities and cryptocurrency-linked assets in a single instrument.
The index will track the so-called “Magnificent 7” tech stocks of Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla, along with Coinbase’s stock and two of the largest crypto trusts, BlackRock’s iShares Bitcoin Trust (IBIT), and iShares Ethereum Trust (ETHA).
Each component will be equal-weighted at 10% to eliminate a single asset over-weighting the index. MarketVector, the official index provider, will rebalance quarterly.
Bridging Legacy Tech and Crypto Markets
Coinbase has pointed out that no U.S. derivatives have ever provided access to both equities and cryptocurrencies in one product.
The new futures contract’s aim is to provide a capital-efficient gateway for investors by combining the returns of traditional technology celebrities with the returns of blockchain asset natives.
The hybrid structure adds market access and efficiency by allowing traders to hedge, add diversifiers, and speculate in two asset classes that typically have taken up residency in their own worlds.
Coinbase sees this as the start of a “new era of multi-asset derivatives” that could change how institutions and eventually retail investors invest in a diversified manner.
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Contract Design and Initial Availability
The index futures contracts will be cash-settled each month, with each contract representing $1 times the index value. For example, if the index is trading at 3,000 points, 1 contract would be worth $3,000 notional.
Initially, the product will only be available to institutional clients, as Coinbase wants to start with larger institutional investors that have regulatory oversight first.
However, Coinbase expects that, over time, retail access will be opened through partner trading platforms, allowing more participants to access this investment vehicle across multiple assets.
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Part of Coinbase’s “Everything App” Vision
For Coinbase CEO Brian Armstrong, the rollout of index futures is a foundational component in Coinbase’s long-term goal to become the crypto “everything app.”
In the last week, Armstrong posted on X that the indexing of futures is just a start and to look for many more innovations as the company executes its “everything exchange” strategy.
The start of this path was hinted at by the company earlier this summer during the “A New Day One” livestream, where it announced the reimagined new Base App.
The Base App seeks to build an on-chain hub for trading, payments, social, and app discovery, creating a digital ecosystem for investors and everyday users.
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Expanding Futures Offerings and Global Reach
Coinbase is slowly gaining traction on derivatives. On June 27, the company announced it plans to launch U.S.-listed perpetual-style nano Bitcoin (0.01 BTC) and Ethereum (0.10 ETH) futures, with expirations of up to five years, regulated under the CFTC, UnoCrypto reported.
This followed Coinbase’s acquisition of DMI, which was worth $2.9 billion, clearly signaling a pivot to mature, regulated crypto derivatives.
About a month later, on July 22, we reported that Coinbase opened perpetual futures to U.S.-based investors through Coinbase Financial Markets (CFM), offering access to nano BTC and ETH futures, with 10x intraday leverage and incredibly low trading fees.
Coinbase’s future plans do extend beyond the U.S. markets, with eyes on Australia’s pension market.
We also reported, on September 2nd, that the company is developing self-managed superannuation fund products, which have already enticed more than 500 potential investors.
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