Coinbase junk bonds sale indicate Wall Street is bullish on crypto and Coinbase looking to obtain futures and derivatives license
Demand for the world’s biggest bitcoin exchange’s junk bond offering has been “unprecedented,” according to Coinbase, which is based in San Francisco. The company initially planned to sell $1.5 billion of defaulted bonds, but after a large number of people requested them, it boosted the amount by a third to $2 billion.
- Coinbase sale attracted bids worth $7 billion, $2 billion in corporate bonds sold.
- SEC still targeted Coinbase for it’s “LEND” program
- Coinbase has begun working on a license to offer futures and derivatives products on its platform.
Coinbase announced its debt offering on Monday, stating the funds may be used for “continued investments in product developments” and “potential investments in or acquisitions of other companies, products, or technologies” the firm may identify in the future.
Junk bonds are corporate debt that has a lower credit rating than investment-grade securities. Junk bonds have higher interest rates than investment-grade corporate bonds due to the lowered credit rating.
According to an Economic Times article, the company obtained at least $7 billion worth of orders for 7- and 10-year bonds with interest rates of 3.375 percent and 3.625 percent, respectively. The received interest rates were also lower than the initial quotations given by Coinbase, according to the report.
Coinbase completed a junk-bond offering for the first time, becoming the second major crypto company to do so after MicroStrategy issued $500 million worth of notes to finance further Bitcoin (BTC) accumulation as the markets tumbled in June.
“The strong demand is clearly a big endorsement by debt investors,” said Bloomberg Intelligence analyst Julie Chariell.
Given the high demand from institutional investors, it’s a pretty clear indication that cryptocurrency is on the road to becoming mainstream.
All of this while the SEC threatens to sue Coinbase over its “lend” program.
If the program were to be implemented, users would be able to get returns by lending funds in USD Coin (USDC), appearing to be a win-win situation. The Coinbase Lend initiative would be rather generous when compared to the nearly-zero interest rates that banks currently offer, providing 4% annual return on deposits of the USD Coin (USDC)
On the other hand, Coinbase has begun working on a license to offer futures and derivatives products on its platform.
Coinbase announced on September 16 that it had submitted an application with the National Futures Association (NFA) to become a Futures Commission Merchant (FCM).
They have also stated “this is the next step to broaden our offerings and offer futures and derivatives trading on our platforms,” in order to further expand the crypto economy.
Coinbase Global Inc. membership application is currently pending on the NFA’s official site, according to its records. If this is approved, the firm would have to register with the Commodity Futures Trading Commission (CFTC). Furthermore, Coinbase would need to submit an application for a specific product or fund with the Securities and Exchange Commission once it has
The NFA is a self-regulatory organization for the derivatives industry in the United States that has been authorized by the CFTC as a registered futures association. An FCM is an organization that takes buy or sell orders for futures or options from clients and receives payment of money or other assets in return.
The SEC has yet to approve any crypto-related exchange traded product (ETP), and the queue of applications is growing. More than 20 applications have already been submitted, but the delay continues.