LONDON – Major cryptocurrency exchange Coinbase said it is buying a crypto futures exchange, FairX, as part of a move to offer crypto derivatives to traders in the United States.
FairX, which was launched last year, is the operating name of LMX Labs. It sells futures products and is regulated by the U.S. Commodity Futures Trading Commission (CFTC).
Coinbase said it wants to make trading of regulated crypto derivatives accessible to retail and institutional customers.
“The development of a transparent derivatives market is a critical inflection point for any asset class and we believe it will unlock further participation in the cryptoeconomy for retail and institutional investors alike,” it said in a blog post on Wednesday.
Trading of cryptocurrency derivatives has grown rapidly since institutional investors have over the past 18 months begun to embrace digital coin trading, presenting big opportunities for platforms that offer future and options.
Crypto derivatives volumes totalled $3.3 trillion in November, according to UK research CryptoCompare, accounting for almost 55% of the total crypto market.
Crypto futures and options products, especially those offered by regulated platforms, are widely seen as less risky than buying and selling cash trading.
That likely makes them more appealing for institutional investors seeking to gain exposure to cryptocurrencies, many of whom are balancing the lure of fast gains with the lingering risks in the emerging industry.
The deal is expected to close in the first quarter, the company said.
Shares in Coinbase ended 1% lower on Wednesday after registering its first day of net gains this year on Tuesday reaching above $246 though it remains down around 39% since it went public in April last year.
Shares were up nearly 3% at $241.20 in premarket trading.
Shares of blockchain-related firms fell earlier this week as bitcoin slid below $40,000. It remains significantly below the all-time high of $69,000 it reached in November last year.