Coinbase is in the process of purchasing FairX, a Commodity and Futures Trading Commission-regulated exchange that offers derivatives, reports Blockworks. The move will enable the company to offer derivatives trading in the intermediate with long-term goals of eventually offering crypto derivatives.
The move follows the company’s goals of diversifying its revenue sources; the crypto exchange has previously relied on trading fees for revenue, but the derivatives avenue would provide a separate income source. Coinbase sees the derivatives space as being full of potential and possibly able to become bigger than spot trading.
“Deep and liquid derivatives markets are essential to the functioning of traditional capital markets. These products are in high demand from investors who seek to effectively manage risk, execute complex trading strategies, and gain exposure to crypto outside of existing spot markets,” Coinbase writes in its blog.
Coinbase said that the acquisition comes after increasing demand from retail customers in particular, and they hope to make the derivatives market easy to access for U.S. customers and help drive long-term growth. The deal is expected to close sometime in the first quarter.
“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 cryptoeconomy for retail and institutional investors alike” Coinbase writes.
The Bitwise Crypto Industry Innovators ETF (BITQ) offers investment into some of the largest companies within crypto in a variety of segments.
BITQ tracks the Bitwise Crypto Innovators 30 Index, an index with at least 85% allocation into companies that are cryptocurrency exchanges carrying bitcoin and other cryptocurrencies, crypto miners, mining equipment companies, and service providers. The remaining 15% is allocated to large-cap support companies with at least one major part of their businesses dedicated to crypto.
BITQ carries crypto companies such as Coinbase Global Inc (COIN) at 10.75%; Silvergate Capital (SI), a bank that provides services for crypto exchanges, at 10.39%; and crypto mining companies such as Hut 8 Mining (HUT) at 3.89%.
The fund has an expense ratio of 0.85% and net assets of almost $115 million.
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