Coinbase has signed a definitive agreement to acquire Deribit, one of the world’s largest crypto options trading platforms, for $2.9 billion. The deal is valued at $700 million in cash and 11 million shares of Coinbase’s Class A common stock.
The takeover indicates Coinbase’s interest in capturing a greater share of the increasing space of crypto derivatives. Deribit still holds this current dominance in Bitcoin options with an open interest of almost $25 billion
Operating since 2016, Deribit moved to Panama in 2020 under regulation pressure. Its dominance in the derivatives market made it an enticing target for Coinbase when it attempts to spread beyond spot trading services.
The Wall Street Journal states that the two companies have been in advanced talks since March. Nevertheless, no final decision has been confirmed so far.
Coinbase Strengthens Position as Competition Intensifies
This is the biggest purchase in the history of cryptocurrencies, indicating the increasing strategic importance of derivatives trading platforms. In addition, the announcement was made during the increased prices of Bitcoin, which contributed to nearly five percent growth in the pre-market trading of Coinbase shares.
Coinbase’s move follows closely the one made by Kraken, which disclosed its acquisition of futures trading platform NinjaTrader for 1.5 billion. The competitive race in exchanges escalates as firms try to market across derivatives and institutional services.
In addition, Ripple recently made headlines for the $1.25b acquisition of Hidden Road, the leading prime brokerage firm. Bloomberg also reported that Ripple’s bid to take over Circle was worth up to 5 billion dollars, a declined bid.
Deribit purchase enables Coinbase to enter the developed and extremely liquid options market, especially for Bitcoin and Ethereum contracts. With the rising institutional interest in crypto derivatives, Coinbase is positioning itself better to fulfill that need with more infrastructure.
The Deribit deal brings Coinbase a global footprint in derivatives that could drive accelerated revenue growth for the company and increase its market influence. Moreover, incorporating Deribit’s technology and customer base might improve Coinbase’s competitive position.
Conclusion
The acquisition of Deribit by Coinbase is essential for the company to become a heavyweight in crypto derivatives. With a rise in regulatory clarity and institutional demand, Coinbase is implementing significant steps to strengthen its place in a highly contested atmosphere.
