Coinbase Global said on Wednesday it had secured regulatory approval to allow U.S. retail customers to trade crypto futures, sending shares of the exchange up 5% in premarket trading.

Coinbase said the approval from the National Futures Association was a "critical milestone that reaffirms our commitment to operate a regulated and compliant business."

In June, the exchange was slapped with a lawsuit by the U.S. Securities and Exchange Commission, which accused it of operating illegally because it failed to register as an exchange.

Crypto derivatives trading volumes in July totaled about $1.85 trillion, according to research firm CCData.

The derivatives market represents almost 80% of the entire crypto market, with leveraged bets on futures and other derivatives often at the root of volatility in the wider market. (Reporting by Niket Nishant in Bengaluru; Editing by Saumyadeb Chakrabarty)