© Reuters. FILE PHOTO: The logo of Coinbase Global Inc, the largest US cryptocurrency exchange, is displayed on the Nasdaq jumbotron market website and others in Times Square in New York, US, April 14, 2021. REUTERS / Shannon Stapleton
LONDON (Reuters) – Major cryptocurrency exchange Coinbase (NASDAQ:) said it is buying crypto-futures exchange FairX, as part of a move to offer crypto derivatives to traders in the United States.
FairX, launched last year, is the operating name of LMX Laboratories. It sells futures products and is regulated by the US Commodity Futures Trading Commission (CFTC).
Coinbase said it wants to make regulated crypto derivatives trading more accessible to both individual and institutional clients.
“The development of a transparent derivatives market is an important inflection point for any asset class, and we believe it will open up greater participation in the crypto economy to individual and institutional investors alike,” she said in a blog post on Wednesday.
Cryptocurrency derivatives trading has grown rapidly since over the past eighteen months institutional investors have begun to embrace cryptocurrency trading, providing ample opportunities for platforms that offer the future and options.
Crypto derivatives totaled $3.3 trillion in November, according to UK-based CryptoCompare research, accounting for nearly 55% of the total crypto market.
Cryptocurrency futures and options products, especially those offered by regulated platforms, are widely seen as less risky than buying and selling cash trading.
This potentially makes it more attractive to institutional investors seeking exposure to cryptocurrencies, many of whom are balancing the lure of quick wins with the ongoing risks in the emerging industry.
The company said the deal is expected to close in the first quarter.
Shares in Coinbase ended 1% lower on Wednesday after posting its first day of net gains for the year on Tuesday to top $246 although it is still down about 39% since it went public in April of last year.
The shares are up nearly 3% to $241.20 in pre-market trading.
Shares of blockchain-related companies tumbled earlier this week with Bitcoin dropping below $40,000. It is still well below the all-time high of $69,000 reached in November of last year.
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