This is no April Fools' Day. Dogecoin is a reliable cryptocurrency, and no longer just a meme to share on the net. Its status is now well understood by all insiders. Precisely for this reason, from Easter the crypto exchange Coinbase will launch futures on DOGE, as well as on Litecoin and Bitcoin Cash. The crypto of the cute dog, in fact, has become a reliable interlocutor. The origins of memes have long since been overcome and the currency has opened up its own market.
To this we owe what was an unsurprising but now formalised decision: to launch futures products on DOGE. Coinbase announced its decision earlier this month, on 7 March, when it sent three letters to the US authority CFTC, the Commodity Futures Trading Commission. On those missives, the exchange revealed its cards and said it was ready to launch cash-settled futures products for the former crypto of the meme.
In a few days, therefore, human traders and crypto bots trained in buying and selling will be able to start trading DOGE futures within Coinbase's popular exchange.
What are cash-settled futures?
The cash settlement is a particular financial activity whose name, as is often the case, is derived from English. The literal translation is cash settlement and the practice consists in the conclusion of a derivative contract (the futures or futures, if there are more than one) in which the two parties do not exchange the so-called underlying asset, i.e. the financial transactions from which the price of a derivative is derived, but a cash sum.
The seller therefore does not hand over a physical asset, something material as is the case in most transactions that take place every day, but transfers the position in cash. In order to do so, it surrenders an amount of money, associated with pre-defined underlying assets, which is in its possession at the time the contract is signed.
Coinbase's precautions regarding DOGE futures
Pending CFTC approval, which may take some time, Coinbase will begin to include DOGE futures contracts within its exchange platform. Of course, before opening negotiations, the exchange will take all necessary precautions.
As revealed in the letters already mentioned, the authorisation to sell futures will be granted by self-certification. It will have to be drawn up by those who offer their derivative contract for sale and will have to comply in full with the guidelines adopted by Coinbase, i.e. those imposed on exchange services operating in the United States by the Futures Trading Commission itself. In short, before proposing the sale of a contract, guarantees of suitability will have to be given.
Except for this requirement, there will be no particular limitations. One of the letters written by Coinbase, and then partially re-shared on their channels, reads:
"Coinbase Derivatives [...] is submitting for self-certification the initial listing of the Dogecoin Futures contract that will be offered for trading on the Exchange from 1 April 2024."
The reasons for the choice
The reasons for Coinbase's decision to offer the possibility to trade Dogecoin Futures is due to the full maturation of the Dogecoin ecosystem. We are now well beyond the joke status with which the so-called memecoin had entered the market. DOGE is now quite reliable, so much so that analysts at the exchange that will open its exchange call it a key element within the crypto sector.
All players in this field have in fact been looking at Dogecoin with different eyes for some time. This also applies to the Spaziocrypto community. Back in February, we stated in no uncertain terms that the DOGE case should be treated as that of a successful cryptocurrency. Coinbase's decision to start considering it an asset for all intents and purposes, so much so as to allow it to be bought and sold on its market, is nothing but a confirmation of the good faith and potential of this ecosystem.
