Source: Reuters
Market Herald logo

Subscribe

Be the first with the news that moves the market
  • Cryptocurrency exchange platform Coinbase is set to buy out derivatives exchange platform FairX as the crypto market matures as an asset class
  • Through the purchase, Coinbase plans to bring regulated crypto derivatives to market, meaning investors will have easier access to crypto futures
  • The move would further cement crypto’s place in the investment economy as the asset class evolves from a fringe investment to more of a traditional-type of asset
  • FairX is regulated by the Commodity Futures Trading Commission (CFTC), meaning the planned crypto futures platform would fall under this same regulation
  • Coinbase says the acquisition is still subject to certain conditions and reviews, but the company expected the deal to close before the end of its first fiscal quarter

Cryptocurrency exchange platform Coinbase is set to buy out derivatives exchange platform FairX as the crypto market matures an asset class.

Coinbase said, through the purchase, it plans to bring regulated crypto derivatives to market, giving investors the opportunity to expand their crypto-based investment portfolio and take on more complex trading strategies.

The move would further cement crypto’s place in the investment economy as the asset class evolves from a speculative and volatile fringe investment to more of a traditional-type of asset.

In fact, the Coinbase announcement comes just days after the International Monetary Fund flagged a growing interconnectedness between virtual assets and financial markets, claiming crypto assets were “no longer on the fringe of the financial system”.

By joining forces with FairX, Coinbase will open up more investment opportunities in the crypto world through its already-popular exchange platform.

Derivatives markets are certainly more complex than typical cash investments, but Coinbase said they are “essential” to the functioning of traditional capital markets.

Fundamentally, derivates are financial contracts that derive their value from an underlying asset or benchmark — meaning Coinbase and FairX would allow investors to buy and sell crypto futures and options and potentially open the door to simplified over the counter (OTC) trading.

“We want to make the derivatives market more approachable for our millions of retail customers by delivering an easy-to-use user experience that Coinbase is known for,” Coinbase said in a media statement.

“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 cryptoeconomy for retail and institutional investors alike.”

FairX is regulated by the Commodity Futures Trading Commission (CFTC), meaning the planned crypto futures platform would fall under this same regulation.

Coinbase said the acquisition was still subject to certain conditions and reviews, but the company expected the deal to close before the end of its first fiscal quarter.

More From The Market Herald

" Chalice Mining (ASX:CHN) maintains strong focus on top-tier Gonneville deposit

ASX 200-listed Chalice Mining (ASX:CHN) has had a rocky day on the ASX following the release…

" Reuters poll: RBA to raise interest rates in November, announce end to bond-buying scheme next week

Economists are expecting the Reserve Bank of Australia (RBA) to flag an end to its bond-buying…

" US Federal Reserve reaffirms likely March rates hike

All eyes were on Wednesday's notes from the latest US Federal Reserve policy meeting, but the…

" Inflation hits 3.5 per cent, pressure grows on RBA

The Consumer Price Index (CPI) climbed 1.3 per cent in the December 2021 quarter and 3.5…