Coinbase Reportedly Explored Acquiring FTX Europe
Cryptocurrency exchange Coinbase has reportedly considered acquiring FTX’s European arm on two separate occasions, in November 2022 and September 2023. Other interested parties include Crypto.com and Trek Labs. FTX Europe, which operated its derivatives business under a Cyprus regulatory license, was the sole provider of popular derivatives products like perpetual futures before its collapse. Derivatives are financial instruments that derive their value from an underlying asset, such as Bitcoin. Despite the current bear market, crypto derivatives trading is on the rise, with global volumes increasing by 13.7% in June 2023. Coinbase aims to boost its fee revenue by entering the derivatives market.
Coinbase’s Quarterly Earnings Report
In Q2 2023, Coinbase generated $707 million in revenue, with $327 million coming from spot trading. This marks a 13% decline from the previous quarter. Meanwhile, centralized exchanges saw a significant increase in derivatives trading volumes. Binance led the way with over $1.21 trillion traded in June, followed by OKX exchange with $416 billion. CME exchange experienced a 28.6% increase in Bitcoin futures volume, reaching $37.9 billion. Coinbase has also obtained regulatory approval to offer crypto futures investments to eligible customers in the United States through its derivatives exchange FairX.
The Potential Benefits of Acquiring FTX Europe
If Coinbase were to acquire FTX Europe, it could potentially enhance its fee revenue due to the growing popularity of crypto derivatives trading. The global crypto derivatives market accounts for around 75% of crypto trading volume worldwide, according to Coinbase. By entering this market, Coinbase aims to capitalize on the increasing demand for derivatives products despite the ongoing bear market.
Hot Take: Coinbase Explores Acquisition of FTX Europe to Expand Derivatives Offering
With the aim of expanding its business and boosting fee revenue, Coinbase has reportedly explored acquiring FTX’s European arm. Other interested parties include Crypto.com and Trek Labs. FTX Europe was the sole provider of popular derivatives products before its collapse. Despite the current bear market, crypto derivatives trading volumes have been on the rise. In Q2 2023, Coinbase generated $707 million in revenue, with $327 million from spot trading. Binance led the way in derivatives trading volume, followed by OKX exchange. By entering the derivatives market, Coinbase aims to tap into the growing demand for these financial instruments.
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