M&A

Coinbase Buys Crypto Futures Platform FairX

The deal positions Coinbase to offer crypto derivative products to U.S. investors as part of a "robust and holistic trading environment."
Matthew HellerJanuary 18, 2022
Coinbase Buys Crypto Futures Platform FairX
Photo: Zhanna Hapanovich

Coinbase has announced it will acquire futures exchange FairX in a move to offer crypto derivative products to U.S. investors.

The acquisition of FairX, which lists futures contracts that track markets including stock indices and oil, comes four months after Coinbase applied for membership in the National Futures Association, the top derivatives self-regulatory organization in the United States.

Coinbase handles the second-largest spot trading volume in cryptocurrencies behind Binance, with a 24-hour trading volume of $3.8 billion, according to CoinMarketCap. But the trading volume of crypto derivatives now exceeds spot trading, reaching $2.9 trillion in December.

Financial exchange operators, including CME Group, “have begun offering crypto futures to provide an established, regulated venue where traders can speculate or hedge their holdings,” according to the Financial Times.

Coinbase said the FairX deal “represents our next step toward creating the robust and holistic trading environment investors are seeking.” The company plans to offer crypto derivatives initially through FairX’s “existing partner ecosystem,” but, over time, will “leverage FairX’s infrastructure to offer crypto derivatives to all Coinbase customers in the U.S.”

“The development of a transparent derivatives market is a critical inflection point for any asset class and we believe it will unlock further participation in the crypto-economy for retail and institutional investors alike,” Coinbase said in a blog post.

As CoinDesk reports, “At present, only a handful of exchanges allow U.S. investors to trade bitcoin and ether futures, with cash-settled products being both the most popular and the longest-available products.”

When it launched last year, FairX said it would aim to offer “simpler, more accessible futures for active individual investors.” It has relationships with major brokerages including TD Ameritrade, E*Trade, ABN AMRO, Wedbush, and Virtu Financial.

In other recent crypto derivative exchange deals, Crypto.com bought Nadez and FTX acquired LedgerX.

FairX’s “market-leading exchange technology and proven ability to deliver listed futures in a straightforward, easy-to-understand structure, align with Coinbase’s commitment to creating a more fair, accessible, efficient, and transparent financial system enabled by crypto,” Coinbase said.