Coinbase has suspended its plans to acquire FTX Europe, a
move that was aimed at enabling it to enter into the European derivatives
market. This turn of events happened as a response to the regulatory challenges
in the US crypto market.
Coinbase targeted FTX Europe due to its profitable
derivatives operations under the Cyprus regulatory license. As the exclusive
provider of perpetual futures in Europe, FTX Europe has a substantial share of
the region’s trading volumes. Its derivatives transactions constitute nearly
75% of the worldwide crypto trading volume, which witnessed a robust growth of
13%, reaching $2 trillion in June.
FTX Europe’s profitability attracted a number of potential
suitors following its parent company’s bankruptcy declaration in the fall of
2022. Among those interested in the deal are industry players like Crypto.com
and Trek Labs.
Derivatives are financial instruments linked to the value of
underlying assets such as Bitcoin and Ether. They have gained significant
prominence within the crypto sphere. As highlighted by crypto analytics firm
Kaiko Research in a report from the second quarter of the year, derivatives
trading has gained more traction than spot trading. Its trading volumes were
six times larger than spot trading volumes.
For Coinbase, this strategic acquisition would have acted as a
countermeasure to its recent decline in revenue from spot trading, as…
