Coinbase has purchased FairX, a designated contract market (DCM) registered with the Commodity Futures Trading Commission (CFTC), which is allowed to offer futures products in the U.S. The move could open the door for the U.S. crypto exchange to offer crypto derivative products in the U.S., CoinDesk reported.
A pioneer in the niche
At the moment, just several exchanges allow U.S. investors to trade futures in bitcoin and ether. Products settled in cash are both the longest-available and the most popular.
Coinbase stated in a recent blog post:
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 crypto economy for retail and institutional investors alike.
Coinbase has also applied for membership of the National Futures Association, a self-regulatory organization overseeing derivatives platforms in the U.S. In September 2021, the US exchange filed to register as a futures commission merchant (FCM), according to a search of the NFA website and a tweet by the company:
This is the next step to broaden our offerings and offer futures and derivatives trading on our platforms.
FairX: a promising futures platform
Albeit being a relatively young futures platform, having launched as recently as May last year, FairX shows a lot of promise. It has fruitful relationships with ABN AMRO, TD Ameritrade, Wedbush, E*Trade, Virtu Financial and other major brokers. They offer FairX’s futures products or provide clearing services.
CoinDesk points out that Fairx.com is different from Fairx.io, which ceased to exist in 2019.
Following in the footsteps of FTX and Crypto.com
Late last year, Crypto.com acquired retail derivatives platform Nadex in a similar move. The dynamically growing exchange launched an ad campaign starring Matt Damon that airs in movie theaters and football games.
In October 2021, FTX.US finalized an acquisition deal they had announced back in August, drawing attention to a multipronged approach on the part of the exchange. FTX acquired regulated futures exchange LedgerX, which changed its name to FTX US Derivatives.
The finalization followed the launch of an NFT marketplace earlier in October. FTX also announced that it had raised $420 million from 69 investors.
FTX also announced a funding round of almost one billion dollars in July 2021. Back then, FTX told media that some of the funds would be used to bring more companies under their umbrella.
Sam Bankman-Fried told CoinDesk at the time:
We’ve probably done a half a billion dollars of acquisitions so far this year.
