Major US crypto exchange Coinbase, the third largest in the world by 24-hour volume, intends to enter the derivatives trading market by acquiring FairX derivatives exchange.
FairX is a designated contract market (DCM) derivatives exchange regulated by the Commodity Futures Trading Commission (CFTC). Despite being relatively new to the market, since its launch in May 2021, FairX has secured brokerage partnerships with industry leaders TD Ameritrade and E*Trade, among 18 others.
Derivatives trading refers to the trading of various foreign products that are tied to the future value of the underlying asset, not trading the assets themselves.
In a January 13 announcement, Coinbase explained its plans to introduce crypto derivatives trading to its clients in the US Coinbase said, “We want to make the derivatives market more accessible to our millions of retail customers.”
a follow-up Tweet The exchange said that adding derivatives trading to its suite of products will ultimately benefit investors on its platform.
“Creating a transparent derivatives market will unlock further participation in the crypto economy for retail and institutional investors alike.”
According to CoinGecko, crypto derivatives have an attractive $137 billion in 24-hour trading volume compared to the previous day. This puts upwards of approximately $55 billion in spot trading volume across crypto exchanges over the same period.
related: Coinbase Announces ‘Almost Entire Company Will Shut Down’ in 2022 to Allow Workers to Recharge for a Four-Week Break
Regarding the importance of creating and nurturing liquid derivatives markets, Coinbase said, “The development of a transparent derivatives market is an important turning point for any asset class.”
Top crypto derivatives exchanges include Binance, FTX, Bybit and OKEx, all of which are also competitors to Coinbase on the spot market.
Coinbase launching regulated crypto derivatives markets would immediately catapult it among the top exchanges in that category as it has 56 million active users, of which 8.8 million make at least one trade per month according to BusinessofApps.