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Coinbase expands to derivatives market; acquires FairX

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Coinbase expands to derivatives market; acquires FairX

Leading crypto exchange, Coinbase, has just acquired, FairX, a derivatives exchange regulated by the Commodity Futures Trading Commission (CFTC).

On January 13, the American cryptocurrency exchange, Coinbase, announced the acquisition of derivatives platform, FairX.  The acquisition will enable the cryptocurrency exchange to enter and explore the derivative trading market through an industry-leading, simplified user experience provided by FairX. This move is set to close Coinbase’s first fiscal year after being subjected to customary closing conditions and reviews.

Acquisition Plans

Coinbase expands to derivatives market; acquires FairX

As per the official blog post, Coinbase plans to bring regulated crypto derivatives to market, initially through FairX’s existing partner ecosystem. At a later stage, they plan to leverage FairX’s infrastructure to offer crypto derivatives to all Coinbase customers in the US. The platform also aims to make the derivatives market more approachable for the retail customers by delivering an easy-to-use user experience.

The acquisition has been termed as the “key stepping stone” for the cryptocurrency exchange which is looking forward to provide its user base with a complete suite of trading tools to access the financial market. The company stated,

“As crypto matures as an asset class and the world’s most sophisticated investors deepen their journey into the cryptoeconomy, a healthy, well-regulated derivatives market will be critical for long-term success.”

As per the post, the derivatives market is essential to the functioning of traditional capital markets. 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. The development of a transparent derivatives market is a crucial parameter for any asset class.

Coinbase expands to derivatives market; acquires FairX

The Emerging Derivatives Market In Crypto

A derivatives trading can be referred to as a system of trading that enables the trader to speculate on the future price of the asset via buying it by selling a derivatives contract to secure enhanced gains when compared with buying the underlying asset. These are essentially financial securities whose value or price is derived from group of assets, such as stocks, bonds, commodities and currencies, among others.

Launched in 2021, FairX is a Designated Contract Market (DCM), which is regulated by the CFTC. The company has secured deals with prominent brokerage organizations such as TD Ameritrade, E*Trade, Virtu Financial, ABN AMRO, Wedbush, Virtu Financial and a handful of others, which offered FairX’s futures products or provided clearing services.

In a similar news, late last year, Singapore based cryptocurrency exchange, Crypto.com, acquired retail derivatives platform Nadex.

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