George Miller
Coinbase Derivatives, LLC has filed a self-certification with the Commodity Futures Trading Commission (CFTC) to introduce futures contracts for Solana (SOL), scheduled to start trading on February 18, 2025. This filing, issued on January 30, 2025, details the contract, which will be a USD-settled index future, with each contract representing 100 SOL.
Details of the Solana Futures Certification by Coinbase Derivatives
In their filing, Coinbase Derivatives declared, “The Exchange hereby submits for self-certification its initial listing of the Solana Futures contract.” The contract, known as the Solana Futures contract (SLC), will be settled in cash based on the MarketVector Coinbase Solana Benchmark Rate, reflecting SOL’s pricing on Coinbase’s spot market. The final settlement prices will be established at 4:00 PM London time on the last Friday of the contract month. The estimated notional value of each contract is about $25,000, assuming SOL’s value is around $250.
According to the filing, there is a position limit of 3,500 contracts, translating to 350,000 SOL. “At a price of $240 per SOL, this totals approximately $84 million, which is about 0.07% of Solana’s market capitalization of $118B,” Coinbase indicated. This limit is set lower than that of Bitcoin futures, which is capped at 0.10% of its market cap.
To safeguard against market manipulation, Coinbase Derivatives has instituted several measures. They emphasize that the futures contract is indexed to a price managed by MarketVector Indexes GmbH, which is regulated by Germany’s BaFin. They also maintain a partnership with Coinbase, Inc. to utilize spot market data for regulatory purposes.
The filing mentions, “The calculation method of the Index, along with monitoring by Coinbase’s surveillance team, significantly minimizes the risk of market manipulation that could impact the contract’s pricing.”
Solana’s Position in the Market and Volatility Factors
Solana has established itself as a prominent blockchain platform, boasting the capability to process over 65,000 transactions per second at minimal costs. The filing highlights SOL’s attractiveness for decentralized applications (dApps), NFTs, and gaming sectors. Yet, Coinbase Derivatives warns that SOL is still a fluctuating asset.
According to Coinbase, “Solana’s 30-day volatility is around 3.9%. In comparison, Bitcoin and Ethereum’s 30-day realized volatilities are about 2.3% and 3.1%, respectively.” To manage drastic price changes, the contract will have a 10% price fluctuation cap each hour, which will trigger a two-minute trading pause if exceeded.
Coinbase Derivatives reports that discussions with market participants and futures commission merchants (FCMs) reveal strong support for the Solana futures contract. They affirm that the contract adheres to all applicable CFTC regulations.
The Exchange stated, “We are not aware of any significant opposition to the contract.” The Solana futures contract will be accessible for trading on the Coinbase Derivatives platform from Sunday through Friday, including a daily pause from 4:00 PM to 5:00 PM CT.