Coinbase purchasing FairX regulated by the Commodity Futures Trading Commission
A CFTC-regulated derivatives exchange, FairX, a Chicago-based derivatives exchange that has a history in the retail market is being acquired by Coinbase, making it possible for the latter to offer cryptocurrency futures and options.
According to the statement by Coinbase, "Over time we plan to leverage FairX's infrastructure to offer crypto derivatives to all Coinbase customers in the US."
The U.S. Commodity Futures Trading Commission (CFTC) regulates FairX, despite the fact that FairX isn't well-known.
Upon closing the FairX acquisition, Coinbase said it would make the derivatives market more accessible to its customers. The acquisition is expected to be finalized by the end of March. Adding, "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." Besides allowing retail and institutional customers to trade bitcoin and other cryptocurrencies on the same platform, the collaboration would take advantage of the growing world of related derivatives.
As a result of its acquisition of FairX, Coinbase will be able to offer its clients access to CFTC-registered crypto futures traded on a regulated platform. Having been approved by regulators in late 2020, FairX launched its exchange in May 2021.
The Commodity Futures Trading Commission (CFTC) has approved FairX as a designated contract market (DCM), which allows it to offer futures products in the U.S.
There are already a few U.S.-based exchanges that have made similar moves to get into the crypto derivatives market in the country, including FTX.US and Crypto.com.
According to CoinMarketCap, Coinbase trades $3.8 billion in 24 hours, making it the second-largest spot cryptocurrency exchange behind Binance.
On Wednesday, Coinbase's shares closed at $234.7, down about 1%. The company's shares climbed about 3.1% to $242 after hours.
CBW - External Analyst