Coinbase attempted to acquire FTX Europe twice after filing for bankruptcy in Nov 2022. The purpose was to expand their global presence in the derivatives market. However, despite initial interest, Coinbase ultimately decided not to pursue the deal, as confirmed by sources familiar with the matter.
According to a report from Fortune, Coinbase conducted two separate evaluations to acquire FTX’s European division potentially. The first evaluation occurred in Nov 2022, following significant turmoil within its parent company. Another evaluation occurred in Sept 2023. A representative from Coinbase confirmed this information and mentioned that they continuously evaluate opportunities for strategic expansion and collaborate with various global teams.
Coinbase, Crypto.com, and Trek Labs are among the entities showing interest in FTX Europe. Fortune reports that the deadline for the sale has been extended until Sept 24. FTX had previously invested nearly $400 million in acquiring its European subsidiary.
FTX Europe operated its derivatives business with a regulatory license from Cyprus. They were the sole provider of popular derivatives like perpetual futures before the collapse of their group. Derivatives are financial instruments tied to underlying assets, such as Bitcoin.
They encompasses various types, including options, futures, and swaps. Investors use derivatives for purposes like hedging, leverage, and market speculation, which makes it a favored strategy among traders and institutions. Due to the increasing interest in crypto derivatives trading, an acquisition could boost Coinbase’s fee revenue even when market conditions are bearish.
Coinbase Expands Into US Derivatives Markets With Regulatory Approval
According to Coinbase’s latest quarterly financial statement, the exchange reported $707 million in revenue for the second quarter of 2023. Out of this amount, $327 million was generated from spot trading, indicating a 13% decrease compared to the previous quarter.
In June, global volumes of derivative trading on centralized exchanges experienced a significant 13.7% increase, totaling $2.13 trillion, according to CCData’s report. Among these exchanges, Binance emerged as the leading platform for cryptocurrency derivatives trading by achieving a volume surpassing $1.21 trillion. Following closely was the OKX exchange with $416 billion in trading activity, marking an impressive 44.9% growth rate. Additionally, Bitcoin futures trading on the CME exchange surged to $37.9 billion, indicating a substantial monthly growth of 28.6%.
Coinbase has recently expanded its presence in the United States derivatives markets. In Aug, it obtained regulatory clearance to offer eligible customers access to crypto futures investments within the country.
The approval granted to Coinbase empowered the company to introduce Bitcoin and Ethereum futures contracts via its regulated derivatives exchange, FairX. As per Coinbase’s announcement, the global cryptocurrency derivatives market constitutes almost 75% of worldwide crypto trading volume and is a crucial gateway for traders.
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