Coinbase Shares Up 3% As Company Plans To Acquire U.S. Derivatives Exchange

Coinbase’s COIN, -1.07% shares went up about 3.2% in extended trade Wednesday, after it announced plans to purchase derivatives exchange FairX.

The mashup would expand the crypto exchange’s offerings for retail and institutional clients, giving them one spot to trade bitcoin BTCUSD, -0.32% and other cryptocurrencies, but also access to the growing world of related derivatives.

After Binance, Coinbase has the second-largest spot trading volume in cryptocurrencies, with a 24-hour trading volume of $3.8 billion, according to CoinMarketCap.

The addition of FairX, a Chicago-based derivatives exchange with roots in the retail market, would help Coinbase expand by offering its clients access to certain crypto futures traded on a CFTC-regulated platform.

The trading volume of crypto derivatives stood at $2.9 trillion in December, surpassing that of spot trading, according to a report by data site CryptoCompare.

Coinbase first plans to provide crypto derivatives through FairX’s existing partner ecosystem and later to all its Coinbase customers in the U.S. using FairX’s infrastructure, according to a blog post by the company. The deal is expected to close in the first quarter.

The move comes as crypto enthusiasts work to make digital assets more mainstream, including efforts to win regulatory approval for a more diverse set of tradable offerings of crypto-related exchange traded funds.

Coinbase’s planned expansion follows rival exchange FTX’s acquisition of Ledger X, a regulated U.S.-based crypto derivatives exchange. However, before the Ledger X purchase, Bahamas-headquartered FTX already provided crypto derivatives to users in other areas, while U.S.-based Coinbase currently only offers spot trading of cryptocurrencies.

Binance and OKEx, which are based outside of the U.S., currently have the largest shares of the global crypto derivatives market.

In September, Coinbase applied with the National Futures Association to register as a futures commission merchant.

Launched in June 2021, FairX partnered with firms including TD Ameritrade, E*Trade Financial, ABN AMRO Clearing Chicago LLC, ADM Investor Services, Advantage Futures, Dorman Trading, StoneX, Wedbush, Virtu Financial and XTX Markets, according to a statement.

Coinbase’s shares closed 1% lower at $234.7 on Wednesday. The company’s shares traded up about 3.1% at $242 after hours.