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As If Crypto Isn't Complicated Enough, Coinbase Jumps Into Derivatives

Coinbase is expanding into derivatives trading with the acquisition of FairX derivatives exchange, a regulated exchange that launched less than a year ago.

As if cryptocurrencies and digital assets weren’t hard enough to figure out.

Coinbase Global  (COIN) , the biggest U.S. crypto exchange, is getting into the derivatives business with the acquisition of FairX, a regulated derivatives exchange that launched less than a year ago.

In a blog post announcing the deal, Coinbase said it plans leverage FairX’s infrastructure to offer regulated crypto derivatives to all Coinbase customers in the U.S. Terms of the deal weren't disclosed.

The move opens the door for Coinbase to offer crypto derivatives products in the U.S. At present, only a handful of exchanges allow U.S. investors to trade bitcoin and ether futures, with cash-settled products being both the most popular and the longest-available products.

The deal "represents our next step toward creating the robust and holistic trading environment investors are seeking," Coinbase said. "We want to make the derivatives market more approachable for our millions of retail customers by delivering an easy-to-use user experience that Coinbase is known for."

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FairX is a Designated Contract Market (DCM) derivatives exchange regulated by the Commodity Futures Trading Commission (CFTC). It launched its exchange last May after receiving regulatory approvals in late 2020. It has relationships with major brokerages including TD Ameritrade, E*Trade, ABN AMRO, Wedbush and others.

"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 said in the blog post.

Coinbase last week received an upgrade to buy from neutral from Bank of America, which lifting its rating due to "...increasing signs of revenue diversification beyond retail crypto trading, a trend we think could accelerate in 2022 and beyond.” 

Oppenheimer in late December included Coinbase alongside Nasdaq (NDAQ) - Get Nasdaq, Inc. Report and S&P Global (SPGI) - Get S&P Global, Inc. Report as its top stock picks for 2022.