Coinbase Set To Up Its Crypto Game With The Acquisition Of FairX

Coinbase has announced the acquisition of Fairx Exchange in its latest move to up its crypto game this year.

According to the Thursday announcement, Coinbase said that the acquisition was part of its plan to provide its retail and institutional customers with the best suite of trading tools to navigate the crypto ecosystem.

“Today, we’re announcing the acquisition of FairX, a CFTC-regulated derivatives exchange or Designated Contract Market, which represents our next step toward creating the robust and holistic trading environment investors are seeking,” reads the announcement.

The company further noted that it would be leveraging on FairX existing partners including TD Ameritrade, Wedbush, ABNAMRO among others who already have an attractive customer base to offer regulated crypto derivatives to its customers in the U.S.

“We want to make the derivatives market more approachable for our millions of retail customers by delivering an easy-to-use user experience that Coinbase is known for.” 

Launched in May 2021, Fair Exchange(FairX) is a CFTC-regulated derivatives exchange dealing in commodity futures contracts. Its team’s deep understanding of product development, market structure, and regulatory compliance are expected to play an upper hand in delivering Coinbase’s progressive agenda for crypto.

However, per the announcement, “The acquisition is subject to customary closing conditions and reviews, and is expected to close in Coinbase’s first fiscal quarter.” During this period, FairX is expected to operate normally. This move comes after Coinbase applied to become a member of the National Futures association last September, a request whose approval is still pending.

With demand for deep and liquid derivatives markets increasingly becoming essential to the operation of traditional capital markets, mainstream crypto exchanges are already exploring ways to merge their services with traditional liquidity providers.

There has been a surge in the number of retail and institutional investors looking to effectively manage risk, execute complex trading strategies, and gain exposure to crypto outside of existing spot markets, necessitating bridging between crypto exchanges and “Wallstreet” liquidity providers.

With very few exchanges allowing US investors to trade crypto futures, exchanges such as FTX.US  are already looking to meet this surging demand. In 2020, FTX acquired LedgerX while Crypto.com agreed to acquire Nadex last month for the same reason.