Coinbase is expanding into derivatives as digital asset markets evolve and liquidity shifts overseas. With derivatives now representing most global crypto trading, the exchange aims to capture institutional demand and stabilise revenues as spot volumes decline. In the second quarter of 2025, institutional spot trading at Coinbase fell by 38%, while its International Exchange cleared over $800 billion in derivatives in the first quarter, matching the total for all of 2024. In a recent interview at TOKEN2049 Singapore, Usman Naeem, global head of derivatives sales and agency trading at Coinbase, maintained that spot trading remains integral to the exchange’s identity, particularly in the United States (US). He acknowledges that market depth now resides in derivatives and argues that Coinbase must strengthen its derivatives capabilities to meet institutional expectations while maintaining its spot market credibility. Derivatives are reshaping market structure As the cryptocurrency market matures, spot trading has given way to derivatives, primarily perpetual futures and options tied to Bitcoin and Ethereum. These now account for about 90% of global crypto trading. Coinbase claims it is adapting its model to reflect this shift. Naeem notes, “Institutional activity goes where liquidity is. Liquidity is like a magnet. For every dollar of spot, eight to ten dollars of derivatives are traded.” Much of this liquidity now operates in centres such as Singapore and Dubai, where exchanges function outside US jurisdiction. The company presents this migration as evidence of the need for international expansion and deeper engagement with institutional investors. Building scale through global expansion and acquisition The exchange seeks to create a broader derivatives ecosystem through international expansion and targeted acquisitions. It launched the Coinbase International Exchange for non-US clients and introduced regulated US futures. Coinbase says its acquisition of Deribit in 2025 adds options and non-linear derivatives to its platform, broadening the range of institutional products available. In July 2025, Deribit processed over $185 billion in monthly volume and held approximately $60 billion in open interest. Naeem says the priority is liquidity continuity. “The biggest concern for clients is continuity of liquidity. At the moment, liquidity is split between Coinbase and Deribit. We want the acquisition to be greater than the sum of its parts. The goal is multiplied liquidity that delivers deeper and more efficient markets.” He stresses that the integration aims to merge liquidity across both platforms and ensure a seamless transition for clients. Coinbase maintains that integrating Deribit will help build deeper liquidity pools and support the development of unified markets across jurisdictions. Evolving institutional adoption and infrastructure needs Naeem says institutional adoption has progressed in phases. Hedge funds first established liquidity through basis and yield trades that relied on capital efficiency. “It was all about ROI (return on investment) on capital,” Naeem recalls. “We built cross-margining, which allows a single pool of collateral to be applied across multiple positions, and financing products to support that.” The current stage, he says, includes discretionary asset managers who focus on hedging, risk management and portfolio optimisation. As participation broadens, institutions are demanding infrastructure, custody and settlement standards equivalent to those in traditional finance. Naeem argues that developing institutional-grade systems has become as significant as product innovation. Institutional applications of blockchain beyond trading Digital assets, the company says, are finding wider uses in treasury operations, cross-border payments and collateral management. Naeem highlights the growing role of stablecoins, cryptocurrencies pegged one-to-one to fiat currencies such as the US dollar, as catalysts of this shift. “They are being used for payroll, invoice settlement and repositioning collateral over weekends. The common denominator in the growth of the digital asset economy is stablecoins.” He adds that digital markets enable continuous access, allowing institutions to manage exposure outside conventional trading hours. Coinbase links this momentum to regulatory developments. The US has established a federal framework for stablecoin oversight through the GENIUS Act, joining Singapore, which already regulates stablecoins. At the same time, the United Kingdom (UK) continues to consult on its proposed standards. “The US has gone from being behind the curve to one of the leaders in regulation,” Naeem says. “Stablecoins will turbocharge everything else because everything in this economy is built on their liquidity.” He points to Singapore’s Monetary Authority (MAS) and other cross-border initiatives as examples of constructive regulatory coordination. The company argues that early engagement with regulators has become a competitive advantage by strengthening institutional confidence. Positioning as a gateway in a competitive landscape Coinbase presents its strategy as bridging traditional finance and digital assets. Naeem says, “We are seen as a connector. Clients can trade regulated products and then transition into spot or perpetual contracts with us. We want to be that gateway between traditional finance and crypto.” The exchange operates in a competitive landscape that includes global platforms focused on product range and the Chicago Mercantile Exchange (CME), which offers institutional familiarity. Exchange-traded funds (ETFs) and tokenised asset funds are also shaping liquidity through crypto holdings and redeployment in yield and lending strategies, linking traditional and digital markets more closely. Naeem claims that Coinbase’s agency-only model differentiates it from competitors. “We have no internal market makers. No participant has more information than another. Everyone is on a level footing,” Naeem explains. “Clients do not need special access; they need fairness. That trust is something we protect heavily.” He cites operational safeguards, including restricted order book visibility and the removal of application programming interface (API) speed barriers, which Coinbase says reinforce transparency and neutrality in market access. From derivatives today to tokenised finance tomorrow Coinbase says it aims to develop an integrated institutional platform that combines custody, staking, financing and trading. “Our North Star over the next 12 to 18 months is a single point of access,” Naeem says. “Clients will be able to custody, stake, finance and trade spot, perpetuals and options under one roof, with cross and portfolio margining similar to traditional finance.” The company seeks to extend this infrastructure to banks and corporates through a white-label model that enables them to offer digital asset services without developing proprietary systems. Institutional demand, it adds, is also expanding into tokenisation, with growing interest in tokenised treasuries and pilot projects in real estate, bonds and equities. Coinbase positions this as an emerging opportunity that could expand the collateral base and create new liquidity channels. Naeem frames the long-term objective as developing a unified market where traditional and digital assets share common liquidity. “This industry can grow ten or twenty times and still not be at its terminal velocity,” he says. He describes the industry as still early in its development, with significant room for growth as institutional participation and infrastructure expand. Coinbase’s leadership identifies the integration of Deribit and ongoing fee management as key priorities as it adapts to evolving digital asset models. The company seeks to position itself as a reliable bridge between institutional and digital finance. Defining the next phase of market integration As derivatives and tokenised assets reshape market structure, Coinbase’s strategy reflects an effort to consolidate its role within a broader institutional shift toward digital finance. Its prospects will depend on whether it can maintain regulatory credibility, integrate its acquisitions effectively and deliver market transparency that satisfies institutional standards. While Coinbase aims to connect digital and conventional systems, the extent of that convergence will ultimately hinge on regulatory clarity, institutional adoption and the evolution of market infrastructure.
