Where are my funds held?
Futures trading is offered by Coinbase Financial Markets, Inc. (CFM), a member of the National Futures Association (NFA) as a futures commission merchant. CFM is also regulated by the Commodity Futures Trading Commission (CFTC).
If you trade futures with CFM, you will have two separate accounts: one from CFM for futures trading (regulated by the CFTC) and one from Coinbase Inc. (CBI) for spot cryptocurrency trading. Although you can see all of your funds in a single view on the “USD asset details" page, spot balances will be held in an account with CBI and futures balances will be separately held in a segregated account with CFM in accordance with CFTC regulations.
Assets held in your CFM futures account will be segregated from CFM’s own assets. All customer assets held by CFM will be subject to customer protection regulations of the CFTC, including CFTC Rule 1.20. In the unlikely event of CFM’s bankruptcy, your futures account is protected under CFTC regulations, including Part 190 rules, and specific provisions of the U.S. Bankruptcy Code.
Spot trading will be conducted out of your spot account held by CBI and is subject to the current Coinbase Inc. User Agreement between you and CBI. CBI maintains licenses to engage in money transmission activities in many states. CBI is not regulated by the CFTC and is not a member of the NFA. Funds held with CBI do not benefit from the CFTC’s customer protection regime.
The CFM Futures Balance screen
The Coinbase Financials Market Futures Balance screen provides a quick overview of your futures cash balances to help you monitor the health of your CFM futures account. Here are some key terms:
CFM Futures USD: The amount of cash available in your CFM futures account at the start of the trading day. It includes any cash that has been moved from your CBI account to your CFM account in order to margin futures positions held overnight, as well as any cash resulting from settled futures transactions.
Futures PnL: This includes both unrealized profits and losses on your open positions as well as any realized but unsettled daily PnL (which is PnL from closing out positions that have not yet settled into cash).
Total equity: The sum of your Futures Cash Balance and Futures PnL. Total equity represents the total value of your CFM futures account at a given point in time.
Initial Margin Required: Margin required to initiate your open futures positions. It acts as a form of collateral, ensuring you have sufficient resources to cover potential losses.
Excess (or Deficit): This is the difference between your Total Equity and the Initial Margin Required. If the difference is greater than zero, this means you have additional funds available in your CFM futures account, which can be used to increase your position or can be moved back to your Coinbase Inc. spot account to spend or send. On the other hand, if your Total Equity falls below the Initial Margin Required, your CFM futures account is in deficit. When your account is in deficit, cash from your Coinbase Inc. (CBI) spot account will be held to cover the shortfall. Remember that cash from your CBI spot account can be used to cover margin requirements or losses on your open futures positions, so being in Deficit does not necessarily mean you will get liquidated or be in debt to Coinbase. CBI is not regulated by the CFTC and is not a member of the NFA. Funds held with CBI do not benefit from the CFTC’s customer protection regime.
Example 1:
You start the day with a CFM Futures USD balance of $10,000. You open and close a position on a nano Bitcoin futures contract and realize a profit of $2,000 that settles only at the end of the trading day (5 PM ET). You also open a new position on a nano Ether futures contract and end the day with an unrealized profit of $5,000.
Your Total Equity would be $10,000 + $2,000 + $5,000 = $17,000. If the initial Margin Required for your open ETH futures positions is $14,000, then your Excess would be $17,000 - $14,000 = $3,000. You can transfer this Excess back to your CBI spot account or keep it in your CFM futures account.
Example 2:
You begin the day with a CFM Futures USD balance of $8,000. During the day, the unrealized loss on your open futures positions reaches -$3,000. However, you also have an unsettled realized profit of $1,500 from closing out a different position, which partially offsets this loss. You end with a combined Futures PnL of -$1,500.
In this case, your Total Equity would be $8,000 - $3,000 + $1,500 = $6,500. If the Initial Margin Required is $7,000 for your remaining open positions, then your Deficit would be $6,500 - $7,000 = -$500. To cover this shortfall, we will place a hold for $500 in your CBI cash account, which you will see reflected in your USD balance breakdown as unavailable (marked as a “Pending transfer to futures account”).
Note: In both examples, the market can also move against you, resulting in a potential loss.
Where do I deposit cash for futures trading?
To make it simple, you deposit cash to your Coinbase Inc. (CBI) spot account. These funds will be transferred systematically from your CBI spot account to your Coinbase Financial Markets (CFM) futures account to support new or existing futures positions.
You must initiate any desired transfer of any excess liquidity in your CFM futures account via a sweep from your CFM account into your CBI spot account. See When and how can cash be transferred between my Coinbase Financial Markets (CFM) futures account and my Coinbase Inc. (CBI) spot account? for more information.
CBI is not regulated by the CFTC and is not a member of the NFA. Funds held with CBI do not benefit from the CFTC’s customer protection regime.
When and how can cash be transferred between my Coinbase Financial Markets (CFM) futures account and my Coinbase Inc. (CBI) spot account?
Cash is always deposited into your Coinbase Inc. (CBI) spot account. Cash will automatically be transferred to your Coinbase Financial Markets (CFM) futures account to satisfy margin requirements.
This helps facilitate trading and satisfy futures margin requirements. This also means that any cash you deposit will be deposited with CBI and held there unless it is needed to satisfy a futures margin deficit in your CFM futures account.
Funds may be transferred from your spot account, maintained by Coinbase Inc., to your futures account, maintained by Coinbase Financial Markets, to support (margin) futures positions. Before you place a futures order, we check to make sure you have enough buying power between your CFM futures account and CBI spot account to support the initial margin requirement for the futures order.
If the buying power in your CFM futures account alone isn’t enough to support the initial margin requirements but you have additional buying power in your CBI spot account, we’ll hold adequate funds in your CBI spot account until the margin requirement is determined by CFM for your CFM futures account for any given day. Because your overall margin requirement changes throughout the day depending on your trading activity and market movements, funds in your CBI spot account may be held until the next business day pending reconciliation and settlement with the futures exchange and clearing house.
If the market moves in favor of your futures positions or if you close positions for a gain, excess liquidity may accumulate and be held in your CFM futures account intraday. You can use this excess liquidity to satisfy margin requirements for other futures trades, which also means that we need to transfer less cash from your CBI spot account after end-of-day reconciliation.
If the market moves against your futures position and additional funds are required to support futures positions in the CFM futures account, funds in your CBI spot account will be held and automatically transferred from your CBI spot account to your CFM futures account in order to maintain your futures position. Only funds necessary to meet a margin deficit will be transferred from the CBI spot account to the CFM futures account. In the meantime, funds in your CBI spot account that are subject to a hold won’t be available to withdraw or to support spot trading activities.
Note that automatic transfers are only from CBI spot to CFM futures accounts, not the other way around. Cash that isn’t being used to margin or maintain futures positions can be transferred by you into your CBI spot account to trade spot assets or for withdrawal. You must elect to transfer any excess liquidity from your CFM futures account into your CBI spot account. Any funds transferred to your CBI spot account won’t receive the preferential treatment afforded to funds held in a regulated futures account pursuant to CFTC's regulations and the U.S. Bankruptcy Code. Until your funds are in your spot account, they cannot be used to acquire any spot assets.
CBI is not regulated by the CFTC and is not a member of the NFA. Funds held with CBI do not benefit from the CFTC’s customer protection regime.
When and how will I have excess liquidity in my Coinbase Financial Markets (CFM) futures account?
You may have excess liquidity in your CFM futures account as you accrue gains on your futures positions or if you close out futures positions, releasing margin held in your CFM futures account.
Unrealized gains occur when the market value (or open trade equity) of your open positions increases. The sum of your cash balance and open trade equity will offset your margin requirements. Therefore, as your open trade equity increases, we won't need to encumber as much of your cash balance anymore. When this occurs and you want to use the freed-up funds elsewhere, you can move excess cash from your CFM futures account to your Coinbase Inc. (CBI) spot account. CBI is not regulated by the CFTC and is not a member of the NFA. Funds held with CBI do not benefit from the CFTC’s customer protection regime.
Example:
Day 1: You pay $100 to buy a futures contract with 3x leverage at a price of $300. At the end of Day 1, $100 in cash will be transferred from your CBI spot account to your CFM futures account.
Day 2: The contract’s price increases and settles at the end of Day 2 at $310. You now have an excess of $10. That day you also schedule a transfer of your excess funds to your CBI spot account.
Day 3: Because you scheduled a transfer on Day 2, the $10 is moved to your CBI spot account balance automatically at the start of the day (Day 3), which now allows you to withdraw this $10 or use it to buy spot or futures.
Note: The market could also move against you, resulting in a potential loss.
You can cash out from your CBI spot account at any point to your bank account or PayPal.
Bank account
You can use your linked bank account to receive the funds through ACH or wire transfer from your CBI spot account. Depending on your bank, funds can typically be available within 1-3 business days. CBI is not regulated by the CFTC and is not a member of the NFA. Funds held with CBI do not benefit from the CFTC’s customer protection regime.
Learn how to link a bank account.
PayPal
You can choose PayPal to receive your funds (up to $10,000), which are sent immediately.
Note: You can only add funds during a margin call using your linked bank account or USD balance.
CBI is not regulated by the CFTC and is not a member of the NFA. Funds held with CBI do not benefit from the CFTC’s customer protection regime.
When do I have to put money in to avoid liquidation?
If at any point in time you don’t have the required funds in your Coinbase Financial Markets (CFM) futures account and/or your Coinbase Inc. (CBI) spot account to meet the margin requirements to maintain your futures positions, we may automatically liquidate some or all of your futures positions. We will first cancel open spot and futures orders and then liquidate open futures positions in the CFM futures account to satisfy margin requirements.
You’ll need to ensure your cash balance and futures margin equity never drop below the maintenance margin for your portfolio. To help you do that, we recommend looking at the liquidation buffer value.
At a high level, the liquidation buffer chart helps you see how close you are to a liquidation. The liquidation buffer is defined as funds available for margin that are in excess of the liquidation threshold, expressed as a percentage of the difference between initial margin and the liquidation threshold.
We may automatically liquidate your positions when your buffer hits 0%.
When you start, you will have a liquidation buffer of more than 100%.
As you trade, if your positions have losses and your liquidation buffer drops, you will receive a warning in the Futures trade page or via email, SMS, or push notifications. You’ll get two warnings when your liquidation buffer drops: once at 100% and then again at 20%.
As the liquidation buffer drops, you should keep a close eye on your portfolio and add funds or close some positions. If your liquidation buffer drops to 0%, you’ll be liquidated down and see a potential reduction in your cash balances.
If you’re using a bank account to add cash to your CBI spot account, we highly recommend that you do so early to avoid liquidation, since banks can take 3-5 business days to process your transaction. Adding cash from your linked USD balance is instant.
What happens if my positions are automatically liquidated?
Liquidation does not offer the same assurance or price for exiting open positions as self-executing trades to close open positions. Losses incurred due to futures trading may exceed the value of your margin. You may lose all funds held by CFM as margin and all cash in your CBI spot account. If you do not have the required funds in your accounts, your futures position may be liquidated at a loss, and you will be liable for any resulting deficit in your account.
If there are insufficient funds in your account to satisfy a deficit or margin requirement, Coinbase Inc./Coinbase Financial Markets may also sell any other cryptocurrency held in your CBI spot account.
More information on the risks of trading futures can be found in the disclosure we provided you when opening your account (you can review your futures agreements and disclosures here).
What payment methods can I use to add cash to satisfy margin requirements or avoid liquidation?
Cash is always deposited into your Coinbase Inc. (CBI) spot account. Cash will automatically be transferred to your Coinbase Financial Markets (CFM) futures account to satisfy margin requirements.
Bank account (ACH)
You can use the bank account associated with your Coinbase Inc. (SBI) spot account. Because ACH processing may take 3-5 business days, we recommend you add cash or close your positions early to avoid any liquidations.
If you’d like to add a new bank account to add cash or to cash out, please be aware that verifying new bank information may take a few days.
Wire transfer
You can use a wire transfer to add funds to your Coinbase Inc. spot account. Because wire transfers may take 1-3 business days, we recommend you add cash or close your positions early to avoid any liquidations.
Please be careful not to send an overnight or next day ACH. Only actual bank wires ("FedWire") are supported at this time.
Cash (US dollars)
If you have sufficient funds available to cover your margin call, you can use the cash (USD) balance in your Coinbase Inc. spot account to make an immediate payment.
Learn about adding USD funds to your Coinbase Inc. spot account.
CBI is not regulated by the CFTC and is not a member of the NFA. Funds held with CBI do not benefit from the CFTC’s customer protection regime.