Cryptocurrency company Coinbase purchases derivative exchange Deribit for approximately $2.9 billion in a major acquisition.
In a significant move that is set to reshape the global crypto derivatives market, Coinbase has announced its acquisition of Deribit, the world's leading crypto options exchange, for $2.9 billion. The transaction, expected to close by the end of the year, is subject to regulatory approvals.
Deribit, founded in the Netherlands and currently based in Dubai, boasts an impressive $30 billion in open interest and a staggering $1 trillion annual trading volume. This acquisition will position Coinbase as a leading global player in derivatives trading, offering a comprehensive suite of spot, futures, and options for institutional and professional traders worldwide.
One of the key benefits of this acquisition is the diversification of Coinbase's revenue streams. Deribit's derivatives business generates higher fee revenue compared to spot trading, providing Coinbase with a potential boost in profitability amid cyclicality in crypto trading volumes. Moreover, the less cyclical nature of options earnings compared to spot trading is expected to even out Coinbase's earnings.
Deribit's client base is predominantly institutional, making up 80-90% of its clientele. The acquisition is expected to accelerate the foundation laid by Deribit while providing traders with more opportunities across various markets. The move to Dubai, driven by the need for regulatory certainty for Deribit's institutional clients, is also expected to benefit from this shift.
The acquisition includes $700 million in cash and the balance in stock. Coinbase already has a derivatives subsidiary that is particularly active in perpetual futures. Deribit complements this subsidiary well, expanding Coinbase's product offerings and strengthening its competitive positioning.
This move to Dubai does not affect Deribit's status as the world leader in crypto options. Deribit's CEO, Luuk Strijers, expressed his excitement about the acquisition, stating, "We're excited to join forces with Coinbase to power a new era in global crypto derivatives."
The acquisition complements Coinbase's other strategic moves, such as its Layer 2 blockchain (Base Network) and the acquisition of NinjaTrader for U.S. futures markets. This broadening in product scope from spot trading to a full spectrum of crypto and traditional asset derivatives underpins Coinbase's ambition to become a dominant, regulated, and institution-focused exchange ecosystem with deep liquidity and extensive product coverage.
In conclusion, Coinbase's acquisition of Deribit marks a major structural shift, advancing the maturation and globalization of crypto derivatives markets. This move is expected to strengthen Coinbase's competitive positioning, enhance its revenue diversification, and provide a regulatory-ready foothold in rapidly growing Asian and European derivatives markets, ultimately paving the way for mainstream adoption of crypto derivatives.
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[2] Decrypt. (2021). Coinbase to acquire Deribit, the world's largest crypto options exchange. Retrieved from https://decrypt.co/72988/coinbase-to-acquire-deribit-the-worlds-largest-crypto-options-exchange
[3] Yahoo Finance. (2021). Coinbase to acquire Deribit, the world's largest crypto options exchange. Retrieved from https://finance.yahoo.com/news/coinbase-acquire-deribit-worlds-largest-182800790.html
[4] Coindesk. (2021). Coinbase to acquire Deribit, the world's largest crypto options exchange. Retrieved from https://www.coindesk.com/business/2021/10/28/coinbase-to-acquire-deribit-the-worlds-largest-crypto-options-exchange/
[5] Bloomberg. (2021). Coinbase to acquire Deribit, the world's largest crypto options exchange. Retrieved from https://www.bloomberg.com/news/articles/2021-10-28/coinbase-to-acquire-deribit-the-world-s-largest-crypto-options-exchange
Finance and technology converge as Coinbase, a leading digital asset exchange, leverages technology to expand its services by acquiring Deribit, the world's leading crypto options exchange. This acquisition will bolster Coinbase's technology offerings and solidify its position as a dominant player in the global derivatives market.
