Cryptocurrency exchange Coinbase has twice tried to acquire FTX Europe since filing for bankruptcy in November 2022, hoping to expand its overseas derivatives business. However, Cointelegraph has learned that the company has decided not to move forward with the deal.
According to Fortune, Coinbase has twice considered acquiring FTX’s European arm, once in November 2022 (after its parent company’s dramatic collapse) and again in September 2023. A spokesperson for Coinbase confirmed the report:
“We are always evaluating opportunities to strategically expand our business and meet with many teams around the world.”
In addition to Coinbase, parties reportedly interested in FTX Europe include exchange Crypto.com and crypto company Trek Labs. The sale deadline has been extended to September 24, Fortune reported. FTX spent nearly $400 million to acquire its European branch.
FTX Europe operates its derivatives business under a regulatory license in Cyprus. By the time the group collapsed, it was the only firm offering some popular derivatives products, such as perpetual futures. A derivative is a financial instrument whose value is derived from an underlying asset, such as Bitcoin (BTC). There are many types of derivatives, including options, futures, and swaps. Investors use derivatives for hedging, leverage and market speculation. This is a popular investment strategy among traders and institutional investors.
The acquisition is likely to increase Coinbase’s fee revenue, as cryptocurrency derivatives trading continues to grow despite the bear market. According to Coinbase’s latest quarterly earnings report, the exchange achieved revenue of $707 million in the second quarter of 2023, of which $327 million came from spot trading, a 13% decrease from the previous quarter.
Meanwhile, global derivatives trading volume on centralized exchanges increased by 13.7% in June to $2.13 trillion, according to CCData. Binance was the leading venue for derivatives cryptocurrency trading in June, with trading volume exceeding $1.21 trillion in June, followed by OKX exchange, with trading volume reaching $416 billion and activity increasing by 44.9%. Bitcoin futures trading volume on the CME exchange also rose significantly, reaching $37.9 billion, an increase of 28.6% this month.
Coinbase is also venturing into the U.S. derivatives market. In August, it received regulatory approval to offer cryptocurrency futures investments to eligible customers in the country.
According to data from Coinbase, the global cryptocurrency derivatives market accounts for 75% of global cryptocurrency trading volume. https://t.co/wGPDb62dOH
— Cointelegraph (@Cointelegraph) August 16, 2023
The approval enables Coinbase to launch Bitcoin and Ethereum (ETH) futures contracts through its CFTC-regulated derivatives exchange FairX. According to Coinbase’s announcement at the time, the global cryptocurrency derivatives market accounts for nearly 75% of global cryptocurrency trading volume and is a “key access point for traders.”
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