Until FTX collapsed in November, FTX Europe was the only firm offering special crypto derivatives (perpetual futures) to the European market.
Reports have emerged that Coinbase considered acquiring FTX Europe after the exchange’s bankruptcy in November. While the acquisition talks were not successful, Coinbase’s interest in FTX Europe underlines how important derivatives have become to Coinbase’s global strategy.
Whereas spot trading volumes have dipped significantly, there is a greater demand for derivatives. Data from crypto analytics firm Kaiko Research showed that derivatives volume was six times larger than spot volume in the second quarter of 2023. This suggests that derivatives are becoming more popular.
In the Pursuit of a Derivatives License
Until FTX collapsed in November, FTX Europe was the only firm offering special crypto derivatives (perpetual futures) to the European market. The company obtained the necessary license after it acquired Digital Assets AG for $376 million in late 2021.
Up till its parent company declared bankruptcy, the platform continued to gain thousands of users. However, many still consider the derivatives license as a reason to acquire part of the FTX estate.
FTX Europe is not the only entity with a derivatives license that Coinbase has tried to acquire. Previously, Coinbase acquired the FairX exchange in January 2022. A Coinbase spokesperson said:
“We’re always evaluating opportunities to strategically expand our business and meet with many teams around the world.”
FTX Acquisition Remains on the Table
Despite hitting a brick wall with earlier acquisition talks, Coinbase was still making inquiries into the possibility of an acquisition in September. Thus, it is possible that Coinbase may still be able to acquire the defunct FTX Europe.
According to Fortune, the FTX debtors, led by former Enron steward John Ray III, hope to gain maximally from selling FTX’s assets so as to enable customers to get their funds back. Consequently, the team plans to halt sales for as long as possible. Thus, the deadline for completing the sale has been extended to September 24.
Aside from Coinbase, several other crypto companies have also attempted to acquire FTX. Some of the notable ones include Crypto.com, FTX FDM, and Trek Labs. Thus, the FTX Debtors are continuing to evaluate whether there are viable options for the sale of some or all of the assets of the FTX Europe business.
An experienced writer with practical experience in the fintech industry. When not writing, he spends his time reading, researching or teaching.
Babafemi Adebajo
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