Coinbase buys futures exchange FairX

Coinbase buys futures exchange FairX

Banking















Bloomberg

Coinbase Global Inc is acquiring futures exchange FairX in its biggest step yet towards expanding into crypto derivatives.

Already registered with US regulators, the firm could give Coinbase the edge it needs in getting a derivatives marketplace up and running. Terms of the deal were not provided.

“This is the most important stepping stone for us to help a derivatives market come to form,” Brett Tejpaul, head of Coinbase Institutional, said.

Cryptocurrency futures and options — which let investors hedge their bets by agreeing to buy or sell coins on a certain day at a certain price — have long been a glaring hole in Coinbase’s product portfolio. The bulk of Coinbase’s revenues come from spot trading fees in coins like Bitcoin and declines during bear markets can create an urgent need for diversification.

Plus, volumes in the derivatives market outshine that of the spot market, reaching $2.9 trillion in December, according to CryptoCompare.

The acquisition is expected to close in the first quarter.

Exchanges outside of the U.S. such as Binance and OKEx have the lion’s share of the derivatives market — sometimes offering traders up to 100 times leverage.