Coinbase Acquires FairX, Creating Room for Crypto Derivatives Market

Coinbase is launching a cryptocurrency derivatives service for its clients, announcing the acquisition of derivatives exchange FairX.

The acquisition will lay the foundation for Coinbase to open up the cryptocurrency derivatives market. By integrating with FairX’s existing partner ecosystem and infrastructure, Coinbase will be the first platform to offer future products to its U.S. traders.

The official announcement released by coinbase on January 13 claimed that:

“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 cryptoeconomy for retail and institutional investors alike.”

FairX is a Designated Contract Market registered with the CFTC, operating a Futures exchange that offers products on a broad range of asset classes to deliver futures products that meet the needs of active retail investors globally. The acquisition is expected to close in Coinbase’s fiscal first quarter.

For the encrypted economy, the derivatives market will provide investors with more forward-looking products and the spot market because derivatives are various products linked to the future value of the underlying assets, which can meet the needs of investors exposed to cryptocurrencies in high demand. 

According to data from CoinGecko, the total 24-hour trading volume of 24-hour perpetual contracts for crypto derivatives in the past day was as high as $135,383,033,018, and the total 24-hour trading volume of futures was as high as $5,038,126,578.

The entire derivatives market has a trading volume of about $140 billion, which is much higher than the spot trading volume of about $55 billion on cryptocurrency exchanges in the same period.

Top cryptocurrency derivatives exchanges include Binance (futures), FTX (derivatives), Bybit, and OKEx (futures).

Only a handful of exchanges currently allow U.S. investors to trade mainstream cryptocurrency futures. In addition to the Coinbase exchange, FTX.US, the United States subsidiary of FTX Derivatives Exchange, has announced the acquisition of LedgerX- a Commodity Futures Trading Commission (CFTC) licensed derivatives and options service provider in September last year.