Coinbase acquired CFTC-regulated FairX derivatives exchange and paved the way for crypto futures and options trading on the platform as we can see more in today’s Coinbase news.
Coinbase acquired CFTC-regulated FairX derivatives exchange while Crypto.com and FTX made similar moves to access the derivatives market in the US. The top three crypto spot exchanges recorded more than $25 billion in trading volume in the past 24 hours and the top three exchanges for derivatives did $70 billion in trades. The exchanges that only offer simpler buying and selling now want to get into the futures and options contract for BTC and other cryptocurrencies and it’s no wonder.
Coinbase is the only publicly traded crypto exchange in the US that announced it will acquire the CFTC-regulated exchange to do just that. It wrote:
“Over time we plan to leverage FairX’s infrastructure to offer crypto derivatives to all Coinbase customers in the US.”
While FairX is not really a household name, it has one big selling point as it is regulated by the US Commodity Futures Trading Commission. The CFTC has oversight of the derivatives markets for everything beyond commodities. The derivatives are contracts based on other assets that allow people to buy or sell these assets if it reaches a certain price. Futures contracts lock in a commitment while the options contracts give the buyers or sellers a choice of going through with the trade.
The derivatives are useful for hedging investmetns and they are also useful for betting on future prices. The reports from Arcane Research found that the speculators are turning to leveraged trades in derivatives markets at the start of the year. Coinbase said that the latest acquisition is expected to be finalized by the end of March and it will help to make the derivatives market more approachable:
“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.”
It’s not the only US-based exchange that is making a play into the derivatives markets. FTX.US as another major American exchange went ahead with plans to buy LedgerX also regulated by the CFTC. Last month, Singapore-based Crypto.com revealed the purchase of the North American Derivatives Exchange which is giving an entry point into the US crypto derivatives market.
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