To expand its derivatives business overseas, Coinbase attempted to acquire FTX Europe twice since it filed for bankruptcy in November 2022.
Crypto exchange Coinbase attempted to acquire FTX Europe twice since it filed for bankruptcy in November 2022, hoping to broaden its derivatives business overseas. The company, however, has decided not to go forward with the deal, Cointelegraph has learned.
According to a report from Fortune, Coinbase explored acquiring FTX’s European arm on two occasions, in November 2022 — following its parent company’s dramatic debacle — and in September 2023. A spokesperson for Coinbase confirmed the report:
“We’re always evaluating opportunities to strategically expand our business and meet with many teams around the world.”
Along with Coinbase, parties interested in FTX Europe reportedly include exchange Crypto.com and crypto firm Trek Labs. According to Fortune, the sale deadline has been extended to Sept. 24. FTX spent nearly $400 million on the acquisition of its European branch.
FTX Europe operated its derivatives business under a Cyprus regulatory license. By the time of the group’s collapse, it was the only firm to offer some popular derivatives products, such as perpetual futures. Derivatives are financial instruments whose value is derived from an underlying asset, such as Bitcoin (BTC). There are various types of derivatives, including options, futures and swaps. Investors use derivatives for hedging, leverage and to speculate on markets. It’s a popular investment strategy for traders and institutional investors.
The acquisition would potentially boost Coinbase’s fee revenue, as crypto derivatives trading is on the rise, despite the bear market. According to Coinbase’s latest quarterly earnings report, the exchange generated $707 million in revenue in the second quarter of 2023, with $327 million coming from spot trading — a $13% decline from the previous quarter.
Meanwhile, global derivatives volumes traded on centralized exchanges increased 13.7% in June to $2.13 trillion, according to CCData. Binance was the leading venue for derivatives crypto trading in the month, with volume topping $1.21 trillion in June, followed by OKX exchange with $416 billion, up 44.9% in activity. Bitcoin futures volume also spiked on the CME exchange, reaching $37.9 billion, a 28.6% increase in the month.
Coinbase has also moved into derivatives markets in the United States. In August, it obtained regulatory approval to offer investments in crypto futures to eligible customers in the country.
Global crypto derivatives market accounts for 75% of crypto trading volume worldwide, according to Coinbase. https://t.co/wGPDb62dOH
— Cointelegraph (@Cointelegraph) August 16, 2023
The approval enabled Coinbase to introduce Bitcoin and Ether (ETH) futures contracts through its Commodity Futures Trading Commission-regulated derivatives exchange, FairX. According to Coinbase’s announcement at the time, the global crypto derivatives market represents nearly 75% of crypto trading volume worldwide and is a “critical trader access point.”
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