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Coinbase
shares turned lower Thursday after the crypto trading platform said it would acquire FairX, a derivatives exchange.
The acquisition of FairX, which already is registered with the Commodity Futures Trading Commission, fills a void in Coinbase’s product lineup.
In a statement on its blog, Coinbase said the acquisition would allow it to first bring regulated crypto derivatives to market through FairX’s existing partner ecosystem, and then expand to all U.S. Coinbase customers.
“We want to make the derivatives market more approachable for our millions of retail customers by delivering an easy-to-use user experience that Coinbase is known for,” the company said.
The trading volume of crypto derivatives reached $2.9 trillion in December, surpassing that of spot trading, according to a report by data site CryptoCompare. Coinbase has the second-largest spot trading volume in cryptocurrencies behind Binance, with a 24-hour trading volume of $3.8 billion, according to CoinMarketCap, MarketWatch reported.
Analysts at Needham said Thursday that Coinbase’s acquisition of FairX was “an important step in diversifying transaction revenues and moving closer to a one-stop-shop for crypto financial services.”
Needham rates shares of Coinbase at Buy with a price target of $420.
Chris Brendler, a senior research analyst at D.A. Davidson, said the acquisition will help Coinbase in its fight to maintain its high take rates.
“In its most recent quarter, take rates declined as more trading shifted to its lower fee venues,” Brendler said in an email to Barron’s. “The derivatives market offers some higher fee services that can help offset this shift.”
Terms of the acquisition weren’t disclosed. Coinbase said the acquisition would close in its fiscal first quarter.
Coinbase fell 1.7% to $230.75. The stock had traded higher earlier in Thursday’s session.
Write to Joe Woelfel at joseph.woelfel@barrons.com
