Coinbase to Purchase of CFTC Regulated Derivatives Platform FairX

Coinbase Global Inc is coming into the derivatives marketplace with the acquisition of FairX, a Commodity Futures Trading Commission (CFTC) regulated marketplace that offers investors access to innovative derivatives products. In an update shared about the move, Coinbase did not disclose the amount or the worth of the deal and noted that it is subject to regulatory approvals but with an expectation to close by the end of the company’s fiscal first quarter.

The move into the derivatives marketplace is fast becoming a big deal for many crypto exchange platforms, especially Coinbase that started out as a predominantly spot trading platform. With FairX, Coinbase Global Inc believes its move into the derivatives trading world will receive a massive boost as the startup is simple to use and aligns with the latter’s long-term growth prospects.

“Today, we’re announcing the acquisition of FairX, a CFTC-regulated derivatives exchange or Designated Contract Market, which represents our next step toward creating the robust and holistic trading environment investors are seeking. Through this acquisition, we plan to bring regulated crypto derivatives to market, initially through FairX’s existing partner ecosystem,” the announcement reads.

FairX came into existence in May 2021 and has grown to become one of the fastest-growing derivatives startups in operation today. In its growth strides, FairX has inked brokerage partnerships with outfits like TD Ameritrade, E*Trade, Daniels Trading, and Edge Clear amongst others. 

Derivatives Trading and the Clamor Amongst Centralized Exchanges

Derivatives trading is arguably one of the most important offshoots of traditional financial markets and it is fast encroaching into the digital currency ecosystem. With expansion and growth the mantra of every mainstream trading platform out there, the desire to extend their offerings into derivatives trading either directly or through smaller company acquisitions is therefore becoming pertinent.

FTX.US, the US subsidiary of FTX Derivatives Exchange completed the acquisition of LedgerX back in October 2021 in order to gain exposure to derivatives trading, a similar move that is currently being trailed by Coinbase Global Inc. While FTX is prominently ranked as the fifth largest exchange for Derivatives trading according to data from CoinMarketCap, Coinbase is absent in the rankings, a situation that largely informs its decision to acquire derivatives trading offshoot.

While the Coinbase Global Inc deal is awaiting the regulatory green light, the exchange said FairX will continue to operate as a normal entity in the meantime with the former crypto behemoth focusing on its trading platform and relatively new NFT marketplace.