Coinbase Explored Acquisition of FTX Europe
Coinbase, a US-based digital assets exchange, has considered acquiring FTX’s European entity, according to documents viewed by Fortune. Coinbase explored the possibility of purchasing the Cyprus-licensed platform both shortly after FTX filed for bankruptcy protection in the US in November 2022 and as recently as September 2023.
The report suggests that Coinbase’s interest in FTX Europe reflects the growing significance of derivatives in its global business strategy, as spot trading volumes have decreased during the bear market. However, discussions regarding the acquisition did not progress to an advanced stage, and a person familiar with the matter stated that Coinbase is no longer pursuing the deal.
Growth of Crypto Derivatives Trading
Data from crypto analytics firm Kaiko Research reveals that financial instruments based on cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) accounted for a substantial portion of crypto trading in the second quarter of 2023. The volume of crypto derivatives trades was six times larger than spot trades during this period.
Uncertainty Surrounding Crypto Derivatives Regulation
While the regulatory future of crypto derivatives remains uncertain in the US, the European Union has yet to implement comprehensive regulations under its newly adopted Markets in Crypto Assets (MiCA) law. FTX Europe, which was acquired for $376 million in 2021, was the only platform offering crypto derivatives called perpetual futures in Europe before FTX’s collapse.
Coinbase’s Expansion Plans and Interest from Other Buyers
In a blog post published earlier this month, Coinbase confirmed its intention to expand in jurisdictions that are adopting clear regulations for the cryptocurrency sector, particularly in Europe. Meanwhile, other potential buyers, including Trek Labs, have expressed interest in acquiring FTX Europe’s European license. The deadline for offers has been extended to September 24, according to a source mentioned in the article.
Hot Take: Coinbase Considers Acquiring FTX Europe Amidst Regulatory Uncertainty
Coinbase’s exploration of acquiring FTX Europe highlights the increasing importance of derivatives in its global business plan. As spot trading volumes decline, Coinbase recognizes the potential value in crypto derivatives. However, regulatory uncertainty in the US and Europe complicates the landscape for these financial instruments. While the EU is yet to implement comprehensive regulations under MiCA, Coinbase is actively seeking jurisdictions with clear regulations for expansion. The interest in FTX Europe’s European license from Coinbase and other potential buyers demonstrates the significance of this platform in the crypto market. As the deadline for offers approaches, it remains to be seen how this acquisition landscape will evolve.
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