Coinbase Announces Acquisition of CFTC-Regulated Derivatives Exchange

Coinbase made the announcement in a company blog post on Jan. 13 which revealed that the exchange is acquiring FairX, a Commodity Futures Trading Commission (CFTC) regulated derivatives exchange.

The company stated that the move will pave the way for it to offer crypto derivatives to American customers.

“The acquisition is a key stepping stone on Coinbase’s path to offer crypto derivatives to retail and institutional customers in the US.”

Derivatives are financial contracts whose value is linked to the value of an underlying asset, in this case, Bitcoin or Ethereum. They could include futures, options, swaps, or perpetual contracts for crypto assets.

Coinbase Entering a Crowded Market

The company is aiming to compete with the FTX U.S. derivatives exchange which has emerged as a serious rival over the past year. According to CoinGecko, FTX processed $74 million in derivatives volume over the past 24 hours.

Binance is the world’s leading derivatives exchange, however, with a daily futures volume of $768 million. The total volume for all 59 derivatives exchanges listed on the platform was $129 billion over the past 24 hours.

Coinbase stated that it plans to bring regulated crypto derivatives to market, initially through FairX’s existing partner ecosystem. As with most Coinbase moves, the new products will only be available to select clients but it plans to expand to cover “all Coinbase customers in the US.”

“Deep and liquid derivatives markets are essential to the functioning of traditional capital markets,” Coinbase stated before adding that these products are in high demand.

The company stated that the development of a transparent derivatives market is a “critical inflection point for any asset class” before stating:

“We believe it will unlock further participation in the cryptoeconomy for retail and institutional investors alike.”

COIN Price Update

Coinbase stock has actually fallen slightly over the past 24 hours from an intraday high of $244 to an after-hours price of $234.

COIN has retreated 6.7% since the beginning of the year and is currently down 33% from its November 8 all-time high of $351 according to FXempire.

The retreat mirrors that of the entire crypto market which has fallen by around 30% in terms of total market capitalization since its November all-time high of just over $3 trillion. Crypto markets have rebounded a little today, gaining 3.3% over the past 24 hours to reach a $2.2 trillion total market cap.

Binance Coin (BNB), Solana (SOL), Cardano (ADA), and Terra (LUNA) are leading the gains at the time of writing.