Coinbase Gets FairX: Provides 'Crypto Derivatives Trading' Rules

Cryptocurrency exchange Coinbase has acquired FairX, a trading platform regulated by the US Commodity Futures Trading (CFTC). The move is a way for Coinbase to provide an opportunity to deliver "cryptocurrency derivatives" to the United States. The purchases will be closed in accordance with the rules and regulations and are expected to be closed in the first quarter.

According to Coingecko, the packaging industry's top three cryptocurrency exchanges have reached nearly $ 70 billion in market share in the past 24 hours, so it's no surprise that the exchange wants join the movement. ~

Coinbase Ensures Crypto Derivatives Trading Compliance

FairX is not well known, but it has something special. It is regulated by the CFTC.

According to the official blog, Coinbase believes that the health and regulation of the market is important in the long term, as crypto assets are an asset to many investors. Well-known traders around the world have understood their approach to the crypto industry. - Completion time.

The acquisition of FairX, a derivatives exchange controlled by the CFTC, marks the next step for Coinbase in creating a robust trading platform that investors are looking for. Coinbase plans to market custom cryptocurrency derivatives through existing FairX partners, which are an important infrastructure for all crypto customers in the United States. . It offers a user-friendly experience to give millions of users easy access to trading derivatives.

Deep market and liquid derivatives have traditionally been essential to the functioning of the stock market, and derivatives are in high demand by investors looking to have positive risk management, perform complex trading strategies and gain exposure to crypto assets. outside of the traditional stock market. Therefore, improving the transparency of the derivatives market is a key issue for all assets that will open greater involvement in the crypto industry for both retailers and businesses.

The discovery also created a Coinbase team with expertise in product development, business modeling, and compliance management. FairX's technology exchange and ability to provide future names in easy-to-understand formats will also help realize Coinbase's vision.

Coinbase's Income Diversification Adds Another 'Grand General'

While Coinbase has always viewed the exchange rate as an important source of income, the exchange has struggled to disclose its income since 2021.

Currently, Coinbase operates in over 100 countries and its products can be divided into three main functions.

Personal: Coinbase, wallet, USD coin

For businesses: Prime, Commerce, Exchange

For: Cloud, Connect, WalletLink

(Bonus: Allows investors to buy, retail, and invest crypto assets on a large scale. Business: Allows businesses to accept cryptocurrency payments using the Coinbase trading platform.)

Looking at historical data, Coinbase's revenue in 2020 reached $ 1.3 billion, but this number is not comparable to its financial performance in 2021. The company reported revenue of $ 2.2 billion. dollars and revenues of $ 1.6 billion for the second quarter of 2021 alone. This income comes from three different sources of income.

The first is the income of entrepreneurs and companies. Coinbase charges a conversion rate of 0.5% to 3.99% depending on payment type, user's country of residence, currency, exchange rate, etc. In the second quarter of 2021, Coinbase reported revenue of $1.8 billion and net income of $102.4 million.

The second is subscription and revenue from the service. Income of $122.6 million includes child support, blockchain gift, income support and other benefits.

The third source of income is Coinbase which sells crypto assets. Sometimes a business would sell its assets to customers and list them as income. In the second quarter of 2021, that revenue was nearly $ 195 million.

It's not hard to see that the company's income is still dependent on exchange rates, but we had early successes in addition to other income. For example, revenues from businesses such as finance and family businesses have increased from $ 8 million to $ 1,243 million in a single year.

Today, Coinbase's expansion into the more popular derivatives market will provide another significant opportunity for Coinbase to increase revenue, giving it 55 million subscribers the use of assets.

many candidates

However, Coinbase is not the only cryptocurrency exchange to enter the derivatives realm.

In October 2021, FTX.US, a U.S. FTX cryptocurrency exchange led by Sam Bankman-Fried, completed the acquisition of LedgerX, the CFTC-controlled cryptocurrency derivatives trading platform. . (Bitcoin and Ethereum derivatives trading offers)

Released in 2017, LedgerX has a history of conflict. In 2019, the exchange's co-founders, Paul and Juthica Chou, resigned due to a dispute with the CFTC. LedgerX had already announced future Bitcoin exchanges at the time, but had to withdraw the announcement because the CFTC had not yet given permission to the company. LedgerX has undergone changes since its management and now holds Derivatives Clearing Organization (DCO), Business Permit (DCM) and Swap Execution Facility (SEF) licenses through the CFTC.

As expected, FTX.US will begin allowing LedgerX to continue serving existing customers under its brand. However, over time FTX.US plans to integrate LedgerX on its own and launch new products.

Brett Harrison, president of FTX.US, said in a statement: “The global volume of cryptocurrency derivatives trading is more than just cryptocurrencies because the market is attractive to many investors for performance and supervision. market.] ...] Rapidly growing market in the United States are an important part of our strategy to provide regulated crypto derivatives to our customers in the field. United States We believe that our technological capabilities, the LedgerX integration and our product portfolio will bring new products to everyone. Yes, we are delighted to take these steps and to work with US administrations to comply with existing authorization procedures. "

Singapore-based Cryptocom announced in December that it would acquire the North American Derivatives Exchange (Nadex) and Exchange from London-based financial services group IG Group for $216 million. Cryptocom may provide future products and services to US users if the exchange is approved by management.

It should be noted that cryptocurrency derivative exchanges such as Binance, Bybit, and OKEx will also be strong competitors for Coinbase with a first-come advantage.