Coinbase Abandons Plans to Acquire FTX Europe Amid Expansion Strategy
Summary:
Cryptocurrency exchange Coinbase had twice attempted to acquire FTX Europe to expand its derivatives business internationally but has now decided against it, as per Cointelegraph. Coinbase had expressed interest in the European division of FTX in November 2022 and again in September 2023. Global crypto derivatives trades make up 75% of the worldwide crypto trading volume, making it a critical access point for traders. Coinbase's planned acquisition could have potentially boosted its fee revenue amidst the rising popularity of crypto derivatives trading, despite the bear market.
Twice since filing for bankruptcy in November 2022, cryptocurrency exchange Coinbase initiated an attempt to take over FTX Europe as a move to expand its derivatives business internationally. However, Cointelegraph reports that the firm has now decided against proceeding with the acquisition. An article by Fortune discloses that Coinbase considered purchasing the European division of FTX twice, once in November 2022 after its parent company's tumultuous downfall, and once more in September 2023. A representative for Coinbase verified this information, stating that they consistently assess opportunities to expand their business in a strategic manner, meeting with various global teams. Besides Coinbase, other entities said to be eyeing FTX Europe are the crypto firm Trek Labs and the exchange Crypto.com. As per Fortune, the selling date is now deferred to September 24. FTX shelled out close to $400 million to buy its European offshoot.
FTX Europe was in charge of the derivatives business under a regulatory license in Cyprus. At the time of its unraveling, it was the sole company offering certain in-demand derivatives products such as perpetual futures. Derivatives are financial products that derive their worth from a base asset such as Bitcoin (BTC). Options, futures, and swaps are among the various types of derivatives. Traders and institutional investors often use derivatives for hedging, leverage, and market speculation. It is a favored investment approach. If successful, the acquisition could potentially enhance Coinbase’s fee revenue, considering the current rise in crypto derivatives trading amidst the bear market. Coinbase's recent quarterly earnings report reveals that the company generated $707 million in revenue in 2023's second quarter, from which $327 million originated from spot trading, indicating a 13% decline from the previous quarter. In contrast, the total derivatives volume traded on centralized exchanges rose 13.7% to $2.13 trillion in June, as per CCData. Binance successfully brokered the most derivatives crypto trades in June, recording a volume of over $1.21 trillion, followed by the OKX exchange with a trading volume of $416 billion. This marked a 44.9% growth in activity. Trading of Bitcoin futures spiked on the CME exchange, amounting to $37.9 billion, a month-on-month increase of 28.6%.
In addition, Coinbase has ventured into the derivatives markets in the US, securing regulatory permission to offer eligible customers crypto futures investments in August. https://t.co/wGPDb62dOH— Cointelegraph (@Cointelegraph) August 16, 2023. Routinely, the global crypto derivatives market makes up 75% of the global crypto trading volume, as Coinbase says. This clearance allowed Coinbase to present Bitcoin and Ether (ETH) futures contracts via its derivatives exchange, FairX, regulated by the Commodity Futures Trading Commission. A statement by Coinbase at the time clarified that the worldwide crypto derivatives market contributes nearly 75% to the global crypto trading volume, making it an essential entry point for traders. Magazine: Recognize and treat cryptocurrency trading addiction.
Published At
9/22/2023 8:30:00 PM
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