Coinbase is buying fledgling futures exchanges to gain a foothold in crypto derivatives, complementing its presence as the largest US-based crypto spot exchange.
The company announced on Wednesday that it will acquire FairX, which was launched last year and is regulated by the US Commodity Futures Trading Commission.
“Through this acquisition, we will initially bring regulated cryptocurrency derivatives to market through FairX’s existing partner ecosystem.” Coinbase said. “In the future, we plan to leverage FairX’s infrastructure to provide cryptographic derivatives to all Coinbase customers in the United States.”
The acquisition will take place when other financial exchange operators, including CME Group, begin offering crypto futures to provide an established and regulated location where traders can infer or hedge their holdings.
Coinbase’s rival FTXUS purchased the derivative platform Ledger X last year. Outside the United States, Binance crypto exchange allows clients to trade futures and options on digital assets.feature is Limited Late last year after the company clashed with UK regulators.
Based in Chicago, FairX lists futures contracts that track markets such as stock indexes and oil. When launched last year with the support of several brokers and trading companies, he said he was aiming to provide “simpler and more accessible futures for active retail investors.” The contract is cleared by node clearing managed by Deutsche Boerse.
“We believe that the development of a transparent derivatives market is an important turning point for all asset classes, which will be the key to further participation in the crypto economy,” said Coinbase.
Derivative products are central to regulatory concerns regarding some cryptocurrency exchanges, as they can quickly expose individual investors to significant losses. Last year, the UK Financial Conduct Authority banned the sale of derivatives to individual investors.
The transaction with FairX is expected to close in the first quarter and no financial terms have been disclosed. Coinbase shares rose 1.2% at the closing price on Wednesday.
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