The three largest cryptocurrency exchanges recorded a trading volume of just over $25 billion in the past 24 hours, according to CoinGecko.
While registered The three largest crypto derivatives exchanges traded $70 billion during the same period.
No wonder then that cryptocurrency exchanges that only offer simple buying and selling want to get into futures and options contracts for Bitcoin and other cryptocurrencies.
announced Coinbase, the only publicly traded cryptocurrency exchange in the United States, yesterday announced that it will acquire derivatives trading platform FairX.
Coinbase Expands into the Crypto Derivatives Market:
The Coinbase ad stated:
Over time, we plan to leverage FairX’s infrastructure to offer crypto derivatives to all Coinbase clients in the United States.
While FairX is not a household name in the crypto market, it does have one major strength, which is that it is already regulated by the US Commodity Futures Trading Commission (CFTC).
The CFTC oversees the derivatives markets for all kinds of things other than just commodities.
Derivatives are contracts based on another asset that allow people to buy or sell that asset (or its cash equivalent) if it reaches a certain price.
Futures contracts lock in an obligation, while options contracts give the buyer or seller the option to pursue the transaction.
Derivatives are useful for hedging and also useful for simple betting on future prices.
A recent report by Arcane Research found that speculators are increasingly leveraged (borrowing from a platform to bet more than they bet) in the derivatives markets early in the new year.
Coinbase says the acquisition of FairX, which is expected to be completed by the end of March, will help make the crypto derivatives market more accessible to its customers.
And she wrote:
These products are in high demand by investors seeking to effectively manage risk, implement complex trading strategies, and gain exposure to cryptocurrencies outside of the current spot markets.
It is worth noting that Coinbase is not the only American company interested in the crypto derivatives market.
In August, FTX.US, the US subsidiary of global FTX trading platform, went ahead with its plans to buy LedgerX, a derivatives trading platform regulated by the CFTC.
Last month, Singapore-based Crypto.com revealed the purchase of a derivatives trading platform in the United States of America, which will give it an entry point into the emerging cryptocurrency derivatives market in the United States.
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