Coinbase is buying a futures exchange to gain a foothold in cryptocurrency derivatives, the digital currency platform said on Wednesday.
It plans to acquire FairX, which launched last year and is regulated by the US Commodity Futures Trading Commission. Financial terms were not disclosed and shares in Nasdaq-listed Coinbase rose 1.2% on Wednesday.
“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 in a blog post.
The Chicago-based FairX lists futures contracts that track markets, including stock indices and oil. Its contracts are cleared by Nodal Clear, which is controlled by Deutsche Börse.
Crypto Derivatives Make a Market Entry
“Through this acquisition, we plan to bring regulated crypto derivatives to market, initially through FairX’s existing partner ecosystem,” Coinbase, headquartered in San Francisco, said.
Several exchange operators have begun offering crypto futures to provide an established, regulated venue where traders can speculate or hedge their holdings.
Last year, FTX US bought derivatives platform LedgerX last year, while crypto exchange Binance allows its customers to trade digital asset futures and options.
“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,” Coinbase said.
“The development of a transparent derivatives market is a critical inflection point for any asset class and we believe it will unlock further participation in the crypto-economy for retail and institutional investors alike,” it added.
The FairX acquisition is expected to close in the first quarter of 2022.
- George Russell