Coinbase / FairX 2022
Coinbase acquired FairX for $275M on January 12, 2022.
- Target
- FairX
- Acquirer
- Coinbase
- Deal value
- $275M
- Deal type
- Cash
- Announced
- January 12, 2022
- Sub-sector
- Crypto / Digital Assets
Transaction overview
- Coinbase announced the acquisition of FairX on January 12, 2022 for approximately $275 million in cash.
- The deal closed on February 1, 2022, roughly three weeks after announcement.
- FairX was a CFTC-regulated derivatives exchange offering simplified futures products aimed at retail traders.
- FairX held a Designated Contract Market (DCM) license from the CFTC at the time of acquisition.
- Coinbase sought the acquisition to enter regulated US crypto derivatives markets without building a DCM license from scratch.
- Coinbase is a publicly traded US crypto exchange that went public via direct listing on Nasdaq in April 2021.
- The acquisition gave Coinbase an existing regulatory framework to offer futures products to US retail customers.
Why it matters
- The deal gave Coinbase a CFTC-regulated venue, a structure US crypto exchanges had rarely acquired directly rather than built.
- FairX's DCM license positioned Coinbase to compete with CME Group in retail-accessible crypto futures in the US.
Strategic rationale
Coinbase acquires CFTC-regulated derivatives exchange to launch regulated crypto futures and reach institutional traders.
Deal terms & multiples
About FairX
FairX was a Chicago-based derivatives exchange founded in 2019 and regulated by the CFTC as a Designated Contract Market. The exchange focused on simplified, smaller-notional futures contracts designed to be accessible to retail investors rather than institutional traders. FairX listed products including micro Bitcoin futures. The company raised venture funding before its acquisition by Coinbase.
- Founded
- 2019
- HQ
- United States
- Prior funding
- Approximately $27 million raised across venture rounds prior to acquisition.
- Key metric
- CFTC Designated Contract Market license — one of a small number held by crypto-focused venues in the US at close.
About Coinbase NASDAQ: COIN
Coinbase is a US-based cryptocurrency exchange founded in 2012 and headquartered in San Francisco. The company went public via direct listing on Nasdaq in April 2021 under the ticker COIN. Coinbase operates spot trading, custody, and staking services for retail and institutional customers. At the time of the FairX deal, Coinbase had no CFTC-regulated derivatives venue in the United States.
- Founded
- 2012
- Ticker
- NASDAQ: COIN
Frequently asked questions
How much did Coinbase pay for FairX?
Coinbase paid approximately $275 million in cash. The deal was announced January 12, 2022 and closed February 1, 2022.
Why did Coinbase acquire FairX?
Coinbase wanted a CFTC Designated Contract Market license to offer regulated futures products to US retail customers. Acquiring FairX was faster than applying for a new license.
What did FairX do before the acquisition?
FairX operated a CFTC-regulated futures exchange focused on simplified, small-notional contracts for retail traders, including micro Bitcoin futures.
Was FairX profitable at the time of the deal?
Publicly available information does not include FairX's revenue or profitability figures at the time of the acquisition.
What regulatory license did FairX hold?
FairX held a Designated Contract Market license from the CFTC, which allowed it to list and trade regulated futures contracts in the United States.
Did Coinbase already offer derivatives before buying FairX?
Coinbase offered some derivatives products outside the US but lacked a CFTC-regulated venue for domestic retail futures trading before this acquisition.
Sources
- coinbase.com /blog/coinbase-to-acquire-fairx-bringing-regulated-derivatives-to-millions