Coinbase Combines TradFi and Web3 Exposure With New Futures Contract

Coinbase is offering a Mag7 + Crypto Equity Index futures contract, combining exposure to crypto and TradFi stocks. It derives its value from the “Magnificent 7” tech firms, two crypto ETFs, and Coinbase itself.

If this product is successful, it could encourage other exchanges to bundle crypto exposure with unrelated futures contracts. Even if it isn’t, it still signals a new product strategy from Coinbase.

Coinbase’s New Futures Products

During this unprecedented wave of integration between TradFi and Web3, several prominent firms are exploring ways to bridge the gap.

Today, Coinbase is aiming to join the trend with a new futures contract, combining exposure to crypto ETFs and the “Magnificent 7” tech stocks:

Coinbase’s new Mag7 + Crypto Equity Index futures contract is the first of its kind in two important categories.

Specifically, it’s the first US-listed derivative that contains direct spot exposure to crypto and major equities in the same product.

It’s also the exchange’s first attempt to market multi-asset derivatives, and Coinbase plans to list more contracts like this in the near future.

Potential Revolutionary Impacts?

As the name suggests, this contract derives its spot value from ten sources, and the Magnificent 7 are seven of them.

Coinbase’s own stock is also tracked in these futures, alongside BlackRock’s Bitcoin and Ethereum ETFs. Each of these sources represents 10% of the index’s total valuation.

Realistically speaking, this isn’t a huge bridge between crypto and TradFi. After all, the Magnificent 7 are all US tech companies, and several of them already have significant interactions with the industry.

One could argue that everything in this index is part of the US tech sector, especially since it tracks a BTC ETF and not Bitcoin itself.

Nonetheless, this is still an important step. Even if the index doesn’t become massively popular, it’s still Coinbase’s first attempt to offer a new kind of futures contract.

This could be a big milestone for the exchange, even if investors aren’t interested.

However, if markets aggressively pursue this product, that could be a game-changer. Crypto ETFs are already a major gateway for institutional actors like pension funds, those that would never have invested in Web3 beforehand.

If Coinbase leads more exchanges to bundle crypto in their futures contracts, that could inspire huge inflows.