Coinbase (NASDAQ:COIN), the major U.S. cryptocurrency exchange, is reportedly nearing a deal to acquire FTX Europe, as part of its strategy to expand in areas with clear cryptocurrency regulations. This move comes after the bankruptcy of FTX's parent company in the United States last year. Coinbase's interest in FTX Europe is driven by the latter's "highly profitable" derivatives business and growing customer base.
The negotiation between Coinbase and FTX Europe is already in its final stages. The potential acquisition underscores the growing importance of derivatives in Coinbase’s global expansion plans. This interest was ignited shortly after FTX filed for bankruptcy protection in the U.S. in November last year and rekindled as recently as early September.
Coinbase's move to purchase FTX Europe is seen by industry insiders as evidence of the increasing significance of derivatives for its global expansion plans, especially since spot trading volumes have dipped into the bear market. According to data from Kaiko Research, in Q2 2023, the trading volume for crypto financial instruments based on popular cryptocurrencies like Bitcoin and Ethereum was six times the volume of spot trades.
In a recent blog post, Coinbase affirmed its intentions to grow its business in regions with clear regulations for cryptocurrencies, such as Europe. The company stated that every part of the world is seeing progress on crypto-forward regulation, except for the U.S., which is opting for enforcement of existing rules and new regulation through the courts.
FTX Europe was put up for sale after its U.S.-based parent company declared bankruptcy last year. Despite the parent company's troubles, FTX Europe continued to register significant user growth until its last minute. Before going bankrupt, FTX had gained thousands of new users.
However, Coinbase is not alone in its interest in acquiring FTX Europe; other major crypto platforms, including Trek Labs and Crypto.com, have also expressed interest. Bidders had until Saturday, September 24, to make their offers.
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