This article addresses our US-regulated derivatives offering which is available to residents of the US, Canada, and most countries in the European Economic Area ("EEA"). You can learn more about Coinbase's Derivatives products on the Derivatives help page. For US customers, derivatives balances are held with Coinbase Financial Markets (CFM), which is a CFTC registered futures commission merchant and a member of the National Futures Association. Spot balances are managed by Coinbase Inc. (CBI). Funds held with CBI do not benefit from the CFTC's customer protection regime.
In the EEA, this service is available only to eligible customers through Coinbase Financial Services Europe Ltd. (CBFSE). Access is subject to completion of CBFSE’s onboarding and verification requirements, including identity checks and the appropriateness and target market assessments applicable under the current CBFSE framework; if those requirements are not met, access may be refused, limited or withdrawn. EEA Clients need to sign up for a Coinbase Luxembourg S.A. spot account in order to access CBFSE's offering. For Canadian customers, derivatives balances are held with Coinbase Financial Markets (CFM) under foreign dealer and futures commission merchant exemptions. Spot balances remain with Coinbase Canada Inc. (CBCA).
Please note this feature is rolling out gradually and is not yet available to all customers.
Eligible customers in Canada can access US-regulated futures and perpetual-like futures through Coinbase Financial Markets (CFM), Coinbase's CFTC/NFA-registered futures commission merchant. Derivatives trading in Canada is provided to eligible customers only by CFM, not Coinbase Canada Inc. (CBCA).
Eligibility
In addition to standard onboarding qualifications, customers must qualify under their province of residence’s eligibility criteria by meeting at least one of the following criteria:
Having net financial assets of at least $5 million (excluding real estate).
Be a registered investment adviser or dealer.
Customers must attest to their eligibility during onboarding.
Address changes
Customers who move to a different approved province will have a 30-day grace period to re-complete CFM onboarding with the new address or their derivatives access will be disabled.
Customers who move outside of Canada will have their derivatives access disabled immediately. No grace period applies.
In all cases, existing open positions remain unaffected and will continue until they expire or are executed.
Funding
Derivatives accounts require USD as collateral. Only USD and USDC (which is automatically converted to USD) can be used to fund derivatives accounts and meet margin requirements.
CAD cannot be used directly as collateral and must be converted to USDC, which involves a foreign exchange spread.
Tax certification and treatment
Because CFM is a US-regulated entity, it’s required to collect US tax certification from non-US customers, including Canadian residents.
During Derivatives onboarding, Canadian customers will be asked to complete a W-8BEN, an IRS form used by non-US persons to certify their tax status to a US financial institution.
Tax treatment under the Canada-US tax treaty
Capital gains: Non-US persons are generally not subject to US tax on capital gains. Gains from futures trading through CFM are not expected to be subject to US taxation. This does not affect your obligations under Canadian tax law.
Withholding: If US withholding tax applies to any payments from CFM, the Canada-US Tax Treaty reduces the withholding rate to 15%.
Form 1042-S: If US tax is withheld on any payments, CFM will issue a Form 1042-S reporting the amounts withheld.
Related articles
United States: Information provided is not investment advice. Funds held with Coinbase Inc. do not benefit from the CFTC’s customer protection regime. Access to the referenced financial products requires user eligibility, and may not be available in all jurisdictions. The risk of transacting in futures can be substantial and may not be suitable for everyone, possibly resulting in a loss of funds greater than the total amount of funds you have on deposit in your CFM account, together with any funds in your Coinbase Inc. account or any other accounts held with Coinbase affiliates. Leverage in futures trading can work for you or against you. The risk of loss using leverage can exceed your initial investment amount. Please review the CFM Futures Risk Disclosure Statement for more information. Coinbase Financial Markets makes no representation on the suitability of information provided or to a particular financial product.
Coinbase Financial Markets is a member of National Futures Association (NFA) and is subject to NFA's regulatory oversight and examinations. However, NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians, or markets.
Assets held in your CFM futures account will be segregated from CFM’s own assets. All customer assets held by CFM will be subject to customer protection regulations of the CFTC, including CFTC Rule 1.20. In the unlikely event of CFM’s bankruptcy, your futures account is protected under CFTC regulations, including Part 190 rules, and specific provisions of the U.S. Bankruptcy Code.
Any funds transferred to your Coinbase Inc spot account won’t receive the preferential treatment afforded to funds held in a regulated futures account pursuant to CFTC's regulations and the U.S. Bankruptcy Code.
European Economic Area: The information contained on this page does not constitute marketing material or a solicitation to trade in the products or services described here.
Derivatives trading is available to eligible EEA customers through Coinbase Financial Services Europe Ltd. (CySEC License 374/19). In order to access derivatives, customers will need to pass through our standard assessment checks to determine their eligibility and suitability for this product.
Derivatives are complex instruments and come with a high risk of losing money rapidly due to leverage. Derivatives are complex instruments and are not suitable for most investors. You should consider whether derivatives are suitable for you, and seek independent professional advice if needed. The value of your product can go up and down, and your capital is at risk. You could lose all invested capital.
The products and services offered here may however not be available in your country, or may not be offered by Coinbase Financial Services Europe Ltd.
For eligible EEA customers, negative balance protection applies. Learn more here. If your deposit is in EUR, it will first be converted to USDC, and then USDC will be converted to USD.
Coinbase Financial Markets is a member of National Futures Association (NFA) and is subject to NFA's regulatory oversight and examinations. However, NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians, or markets.