Coinbase Announces FairX Acquisition

A leading cryptocurrency exchange, Coinbase announced on Wednesday the acquisition of a US-based CFTC-regulated derivatives exchange, FairX.

Announced on the Coinbase blog, the acquisition now enables Coinbase to offer crypto derivatives products in the US. The company said: "Over time, we plan to leverage FairX’s infrastructure to offer crypto derivatives to all Coinbase customers in the US."

“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.”

FairX is a relatively youthful designated contract market (DCM) having launched in May 2021. Additionally, it received regulatory approvals from the Commodity Futures Trading Commission (CFTC) in late 2020. Despite being a new kid on the block, FairX has successfully established relationships with major brokerages, including TD Ameritrade, E*Trade, ABN AMRO, Wedbush and Virtu Financial.

FairX, the operating name of LMX Labs LLC, becomes the latest big crypto exchange acquisition following Crypto.com's purchase of the retail derivatives platform, Nadex at the end of last year.

Currently, only a small number of exchanges allow investors from the US to trade bitcoin and ether futures, with cash-settled products being both the longest-available and most popular products. LedgerX was acquired by FTX.US in August 2020 for a similar purpose.

The Coinbase blog stated that the acquisition "is expected to close in Coinbase’s first fiscal quarter. FairX will operate normally during this period."

The move by Coinbase comes after its application for membership in the National Futures Association, a self-regulatory agency, is shown as being still pending.