The cryptocurrency exchange Coinbase has acquired FairX, a derivatives trading platform based in the United States. It is expected that this will allow Coinbase to offer derivative products related to crypto assets in the U.S. It is estimated that there are currently only five exchanges that allow U.S. investors to trade bitcoin and ether futures, of which cash-settled products were the most popular and most available long before cryptocurrency exchanges. Last August, FTX.US acquired LedgerX, with a similar goal in mind.
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.
Coinbase
As a registered WCM (designated contract market), FairX is licensed by the Commodity Futures Trading Commission (CFTC), meaning that it is able to offer futures products in the United States. Furthermore, Coinbase has submitted an application to the National Futures Association, an organization responsible for overseeing derivatives platforms in the U.S.
After receiving regulatory approvals from the Securities and Exchange Commission in late 2020, FairX launched its exchange in May 2021 as a relatively young futures exchange. The company has relationships with major brokerage firms, including E*Trade, TD Ameritrade, ABN AMRO, Wedbush, Virtu Financial and a few others, which offer FairX’s futures products or cover clearing requirements for its clearing clients.
The introduction of regulated crypto derivatives markets by Coinbase would immediately catapult it into the top 10 exchanges in the category. Coinbase announced that it had 56 million active users of whom 8.8 million made at least one trade per month, according to BusinessofApps.
