Coinbase Acquires FairX Derivative Exchange to Offer Crypto Derivatives
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Coinbase acquires FairX, a Chicago-based CTFC-regulated derivatives exchange, to offer crypto derivatives to its retail and institutional US customers.
The NASDAQ-listed cryptocurrency exchange announced the news in a blog post on Thursday, January 13. According to Coinbase, “the acquisition is a key stepping stone on Coinbase’s path to offer crypto derivatives to retail and institutional customers in the US.”
FairX is a futures platform that launched its exchange in May 2021 after receiving regulatory approvals in late 2020. The addition of FairX to its ecosystem will help the exchange to expand by enabling it to offer its clients access to certain crypto futures traded on a CFTC-regulated platform. Coinbase said:
“Through this acquisition, we plan to bring regulated crypto derivatives to market, initially through FairX’s existing partner ecosystem. Over time, we plan to leverage FairX’s infrastructure to offer crypto derivatives to all Coinbase customers in the US. We want to make the derivatives market more approachable for our millions of retail customers by delivering an easy-to-use user experience that Coinbase is known for.”
The website shows that FairX existing partners include major brokerages including TD Ameritrade, E*Trade Futures LLC, ABN AMRO Clearing Chicago LLC, ADM Investor Services, Wedbush, Virtu Financial, Advantage Futures LLC, Cannon Trading Company, and a handful of other companies which offers FairX’s futures products and provides clearing services.
Coinbase believes that its crypto derivates offerings unlock further participation in the cryptoeconomy for retail and institutional investors alike. The addition of FairX to Coinbase will expand the exchange’s product offering that will provide its millions of customers access not only to spot crypto trading but to the growing world of related derivatives. According to data available, the trading volume of crypto derivatives stood at $2.9 trillion in December, surpassing that of spot trading.
According to CoinMarketCap, Coinbase has the second-largest spot trading volume in cryptocurrencies after Binance, with a 24-hour trading volume of $3.8 billion. Binance is currently the leading exchange in crypto derivatives trading volume, while U.S.-based Coinbase currently only offers spot trading of cryptocurrencies.
As Crypto Economy reported, Coinbase had also applied with the National Futures Association (NFA) to register itself as a Futures Commission Merchant (FCM). With this, Coinbase plans to expand its product offering by offering futures and derivatives trading on its platform.
The blog post notes that the deal is expected to close in the first quarter. The Coinbase (COIN) shares went up about 3.2% following the news on Wednesday.
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