Coinbase Derivatives Has Introduced XRP Futures Contracts

If you're following developments in the cryptocurrency market, you've likely noticed that Coinbase Derivatives has introduced XRP futures contracts to its US derivatives exchange.

Coinbase Derivatives has begun offering futures contracts on XRP in its US derivatives exchange, according to a report by CC.

Coinbase’s move expands on the existing futures trading options available to investors and traders. It also follows a trend of regulated platforms providing new ways to engage with digital assets like XRP.

But what exactly are XRP futures, and how can you get involved?

What are XRP futures?

XRP futures are standardized financial contracts that permit you to agree to buy or sell XRP at a predetermined price on a specific future date.

Instead of trading the actual token, you’ll be trading a contract that tracks the price of XRP.

These contracts are structured and overseen by the US Commodity Futures Trading Commission (CFTC), adding a level of oversight and organization that appeals to many investors.

On April 3, Coinbase Derivatives filed with the CFTC to self-certify XRP futures contracts, and the contracts were launched on April 21.

Types of XRP futures contracts offered by Coinbase

Coinbase’s offering includes Nano XRP futures, which represent 500 XRP per contract and are cash-settled in US dollars. These are designed for retail traders and smaller institutions, offering lower capital requirements while still providing exposure to XRP price movements.

Standard XRP futures, on the other hand, cover 10,000 XRP per contract, are also settled in USD, and are aimed at larger institutions and active traders.

This variety allows you to choose a position size that matches your risk tolerance and investment strategy.

Both Nano and Standard XRP futures are instruments that let you trade based on the price of XRP—but you don’t actually own or receive any XRP. You’re trading contracts that track XRP’s price.

And, when the contract closes, the difference between your entry and exit price is calculated (profit or loss) and settled in USD—hence the term “cash-settled.”

Both types of futures are available on Coinbase’s derivatives exchange, which offers more than 20 futures contracts on assets such as Bitcoin (BTC), Ether (ETH), Dogecoin (DOGE), Solana (SOL), Chainlink (LINK) and Stellar (XLM).

Why choose XRP futures contracts over buying XRP?

You might be wondering why someone would choose futures over simply buying XRP on the spot market.

Here are a few reasons:

* Leverage: Futures often allow you to control a large position with a relatively small amount of capital. While this can amplify gains, it also increases potential losses.

* Hedging: If you already hold XRP and expect short-term volatility, futures can be used to protect your portfolio.

* Speculation: Futures allow you to take both long (bullish) and short (bearish) positions, so you can potentially benefit from market moves in either direction.

* No wallet or storage needs: Buying XRP requires a secure wallet and managing private keys, which carries risks like hacking or loss. Futures contracts are financial instruments traded on exchanges, eliminating the need for direct XRP custody.

* Liquidity and accessibility: Futures markets often have high liquidity, making it easier to enter and exit positions. Some exchanges offer XRP futures with lower barriers than buying XRP on certain crypto platforms, especially in regions with regulatory restrictions.

* Cash settlement: Many XRP futures are cash-settled, meaning you settle profits or losses in fiat or stablecoins without handling XRP itself, simplifying the process for traders avoiding crypto custody.

When to choose futures contracts:

* You want to trade XRP price movements with leverage or flexibility to go long or short.

* You prefer not to deal with crypto wallets or custody.

* You’re hedging an existing XRP position or portfolio.

* You’re comfortable with the risks and complexities of derivatives.

When to buy XRP:

* You believe in XRP’s long-term value and want to hold it as an investment.

* You plan to use XRP for transactions or in its ecosystem (e.g., Ripple’s payment network).

* You want to avoid the risks of leverage and futures margin calls.

Ultimately, futures suit active traders or those seeking leveraged exposure, while buying XRP could be ideal for long-term holders or users of the asset. You must always assess your risk tolerance and goals before deciding whether to invest in XRP or XRP futures.

Where to invest in XRP futures

If you’re looking to invest in XRP futures, several platforms offer access depending on your location and trading needs.

Kraken Futures provides XRP futures with leverage. In Australia, access is limited to wholesale clients through Beaufort Fiduciaries Pty Ltd (AFSL no. 545124). In the United Kingdom, only clients classified as Professional Clients under Financial Conduct Authority rules can trade through Crypto Facilities Limited (FRN: 757895).

Binance offers XRPUSDT perpetual futures contracts, allowing users to trade XRP without an expiry date