Taking a giant step towards offering crypto derivatives, Coinbase has acquired CFTC-regulated derivatives exchange FairX.
Announcing the news on January 12, Coinbase said in a statement:
“Deep and liquid derivatives markets are essential to the functioning of traditional capital markets. These products are in high demand from investors who seek to effectively manage risk, execute complex trading strategies, and gain exposure to crypto outside of existing spot markets.”
So far, only a small number of crypto exchanges are allowed to offer crypto derivatives in the United States. But with FairX exchange already regulated by CFTC, Coinbase would have the edge necessary to establish a derivatives marketplace.
The creation of a transparent derivatives market will unlock further participation in the cryptoeconomy for retail and institutional investors alike.
— Coinbase (@coinbase) January 12, 2022
Before the Coinbase acquisition, FairX offered accessible futures for active individual investors. It acquired a ‘designated contract market (DCM)’ license from the US Commodity Futures Trading Commission (CFTC) in November 2022. Apart from futures, FairX offers margin trading, providing its products through established brokers like TD Ameritrade.
The financial terms of the deal were not disclosed, but the exchange said it will close the acquisition within the first fiscal quarter of 2022.
“This is an important step toward Coinbase ultimately making the derivatives market accessible to our millions of customers through an industry-leading, simplified user experience,” Coinbase said.
FTX.US, the US subsidiary of crypto exchange FTX, closed a similar acquisition last October after buying LedgerX, the first US-approved crypto derivatives exchange. The acquisition of LedgerX has enabled FTX to offer regulated futures, swaps, and options under CFTC.