Coinbase reported that it is buying FairX, a futures exchange, as part of a move to offer crypto derivatives to traders in the United States. As reported by the exchange itself, its idea is to make the trading of regulated crypto derivatives accessible to retail and institutional clients in their country.
“Developing a transparent derivatives market is a critical turning point for any asset class and we believe it will unlock greater participation in the crypto economy for retail and institutional investors alike,” the exchange said of the deal.
FairX, which launched last year, is the operating name for LMX Labs and its main operation is to sell futures products. FairX is regulated by the United States Commodity Futures Trading Commission (CFTC).
As reported by Coinbase, the deal is expected to close during the first quarter of this year.
Trading in cryptocurrency derivatives has grown rapidly since institutional investors have started embracing digital currency trading in the past 18 months, creating great opportunities for platforms that offer futures and options.
In November, according to a British study Crypto Compare, crypto derivative volumes amounted to $ 3.3 trillion, representing almost 55% of the total cryptocurrency market.
Cryptocurrency futures and options products, especially those offered by regulated platforms, are generally considered less risky than buying and selling cash trades.
This likely makes them more attractive to institutional investors looking to gain exposure to cryptocurrencies, many of whom are balancing the lure of quick wins with lingering risks in the emerging industry.