Key Takeaways
- FairX will be purchased by Coinbase this quarter
- This move is part of a trend to diversify exchange offerings
Coinbase announced in a Wednesday blog that it had acquired FairX, a derivatives exchange regulated by the Commodity and Futures Trading Commission. The amount was not disclosed.
Coinbase initially offers derivatives trading via FairX’s infrastructure but eventually plans to offer it through its own. “leverage FairX’s infrastructure to offer crypto derivatives to all Coinbase customers in the US,” Read the entire post.
According to the company, this acquisition will help Coinbase expand its offerings and meet client demands.
Coinbase’s main revenue stream has always been trading fees, but it has tried to diversify in recent months. Coinbase Prime’s revamped service was launched in May 2021.
Diversifying revenue streams by expanding into the derivatives market, which, in terms of volume, is becoming increasingly popular, can be achieved through a move to spot trading.
“These products are in high demand from investors who seek to effectively manage risk, execute complex trading strategies, and gain exposure to crypto outside of existing spot markets,” Read the entire blog.
Other cryptocurrency exchanges are also looking to expand in the same market. In August of 2021, FTX purchased the futures-and-options platform LedgerX.
“It’s only natural to want to engage the largest capital market in the world inside the US with that same product through all of our existing institutional and retail customers who want to trade these products,” Blockworks’ Brett Harrison, then-US president of FTX.
Coinbase will complete the acquisition of Coinbase in 2022’s first quarter. No details of the agreement were disclosed.
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