Coinbase to Offer Derivatives Product to Customers via FairX Acquisition

UTC by Godfrey Benjamin · 3 min read
Coinbase to Offer Derivatives Product to Customers via FairX Acquisition
Photo: Depositphotos

As Coinbase revealed, the acquisition is subject to regulatory approval, and it said FairX will continue to operate normally.

America’s largest digital currency trading platform Coinbase Global Inc (NASDAQ: COIN) has announced its acquisition of FairX, a relatively new derivatives exchange that is regulated by the Commodity Futures Trading Commission (CFTC).

As shared in a Blog Post by Coinbase, the acquisition is billed to help the company expand its suite of products to both retail and institutional investors and will mark “an important step toward Coinbase ultimately making the derivatives market accessible to our millions of customers through an industry-leading, simplified user experience.”

FairX was launched in May 2021 and has positioned itself as a go-to derivatives platform for all classes of traders. The startup’s product offerings include Bloomberg US Large Cap, SuperTech, Fee Schedule, and Micro Crude Oil Futures amongst others. As detailed on FairX’s platform, it has secured a functional brokerage partnership with industry leaders including TD Ameritrade, E*Trade, ADM Investor Services Inc, and Advantage Futures LLC along with 16 others.

The acquisition of the company by Coinbase will open up the firm to a larger customer base, and help contribute to granting more crypto investors access to additional products beyond spot trading. With derivatives products high in demand in the financial world in general, Coinbase believes it is now positioned with one of the most innovative startups around to launch related products in the near future.

“FairX brings a world-class team with deep expertise across product development, market structure, and compliance to Coinbase. Its market-leading exchange technology and proven ability to deliver listed futures in a straightforward, easy-to-understand structure, aligns with Coinbase’s commitment to creating a more fair, accessible, efficient, and transparent financial system enabled by crypto,” the announcement reads.

As the exchange revealed, the acquisition is subject to regulatory approval, and it said FairX will continue to operate normally, however, the deal is expected to close in Coinbase’s fiscal first quarter.

Coinbase FairX Acquisition: A Trend Amongst Major Exchanges

Most centralized trading platforms began their journeys as simplified spot exchanges, with Coinbase amongst the early comers. However, the attempt to meet up with advancing trends in the cryptocurrency industry has pushed many exchanges to float a derivatives product.

According to data from CoinMarketCap, Binance Exchange currently ranks as the largest derivatives market in the cryptocurrency ecosystem with OKEx, CoinTiger, FTX Derivatives Exchange, and ByBit making the top 5. Coinbase, despite its massive valuation and public listing outlook, is not a major player in the derivatives world, a move that it is keen on turning around.

With the Coinbase acquisition of FairX, proves of a trend is observed as FTX.US also completed the acquisition of Ledger Holdings Inc, the parent company of LedgerX, a Commodity Futures Trading Commission (CFTC) regulated crypto futures and options exchange and clearinghouse back in October 2021, as reported by Coinspeaker.

Undoubtedly, the ecosystem around digital currencies is growing, and it is a no-brainer that the biggest trading platforms are exploring avenues to have a presence all around.

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