Coinbase, the leading US crypto exchange, the third largest in the world by 24-hour volume, intends to enter the derivatives trading markets, having acquired derivatives exchange FairX.
FairX is a Designated Contract Market (DCM) derivatives exchange regulated by the Commodity Futures Trading Commission (CFTC). Despite being relatively new to the market, launching in May 2021, FairX has secured brokerage partnerships with industry leaders TD Ameritrade and E*Trade, along with 18 others.
Derivatives trading refers to the trading of various exotic products linked to the future value of the underlying assets, rather than trading the assets themselves.
On a January 13 advertisementCoinbase explained plans to implement crypto derivatives trading for its customers in the US. Coinbase stated, โWe want to make the derivatives market more accessible to our millions of retail customers.โ
a later cheep of the exchange said that adding derivatives trading to its suite of products would ultimately benefit investors on its platform.
โCreating a transparent derivatives market will unlock greater participation in the crypto economy for retail and institutional investors alike.โ
Crypto derivatives account for a lucrative $137 billion in 24-hour trading volume over the past day according to CoinGecko. This puts it well above the roughly $55 billion in spot trading volume on crypto exchanges in the same period.
Regarding the importance of creating and nurturing liquid derivatives marketsCoinbase said: "The development of a transparent derivatives market is a critical turning point for any asset class."
Major crypto derivatives exchanges include Binance, FTX, Bybit, and OKEx, all of which are also Coinbase's competitors in the spot markets.
Coinbase launching on regulated crypto derivatives markets would likely immediately launch it to the top exchanges in that category, as it has 56 million active users, 8.8 million of whom make at least one trade per month according to app business.
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