Coinbase and FTX
Coinbase is currently mulling over the expansion of its derivatives market. As part of this regime, the firm has made several attempts to acquire the European branch of FTX. The other firm in question reportedly filed for bankruptcy last year in November.
FTX exchange is facing a barrage of lawsuits and the firm is in the process of restructuring its debts. However, the defunct crypto exchange is in possession of massive amounts of cryptocurrency reserves. Coinbase revealed its former stance to broaden the scope of its services to overseas jurisdictions.
Fortune has published a report on the matter stating that Coinbase officials have made two attempts to acquire the European arm of FTX. The first attempt was made in November 2021 when the parent company was facing a critical situation. The second attempt was made in September 2023.
A representative from Coinbase confirmed the report. The official also told the media that the firm is always exploring new opportunities to expand business and interact with new teams around the world. Other companies that have pursued the similar route are Crypto.com and Trek Labs.
FTX Europe to Receive Trading License in Cyprus
The date of acquisition for European wing of FTX is now expanded to 24 September. It is worth noting that FTX $400 million to acquire their European wing. At the same time, the EU wing of FTX received a trading license from regulators in Cyprus.
When the global operations of FTX went down, this wing was the last one to continue its crypto derivatives services such as perpetual futures contracts. It is important to note that derivatives track the prices of assets such as Bitcoin.
On the other hand, there are also many other types of derivatives such as options, swaps, and futures. Crypto investors can acquire derivatives as a way to hedge, speculate, and perform leverage trading.
Derivatives are also considered one of the most popular investment options among financial institutions. If Coinbase completes the acquisition, it will likely boost the revenue for the firm and aid its journey to become a leading crypto exchange and offset the negative impact of sideways price movement in crypto markets.
The earnings report for the second quarter of 2023 for Coinbase shows revenue of $707 million. $327 million share of revenue was generated from spot markets and this metric indicated a 13% decrease in comparison to Q1 2023.
A report from CCData has indicated that crypto exchanges offering derivatives have gained massive momentum in the cryptocurrency space. The report indicated aggregate revenue of around $2.13 trillion from international crypto markets.
Binance reportedly retained the biggest market share in derivatives market for digital currencies reporting $1.21 trillion in June and OKX accounted for $416 billion.
Bitcoin futures trading volume in CME exchange also underwent a visible increase. The total trading volume was recorded at $37.9 billion reporting a 28.6% appreciation.
Coinbase has started to foray into derivative markets for US consumers. The firm acquired regulatory approval to offer digital currency futures trading for accredited account holders. Therefore, the listed exchange introduced Bitcoin and Ethereum futures contracts at the CFTC-approved exchange called FairX. Crypto derivatives account for 75% of total global trading volume as per Coinbase statistics.