According to a media source, prominent U.S. cryptocurrency exchange Coinbase was interested in acquiring the European division of failing coin trading rival FTX. The action has been interpreted as evidence of the derivatives' rising significance in the American platform's desire to build its business internationally.
After declaring bankruptcy and in September, Coinbase held negotiations to acquire FTX Europe.
FTX's entity in Europe may be acquired by Coinbase, according to documents obtained by Fortune. The U.S.-based exchange for digital assets looked into the possibility of purchasing the platform with a Cyprus license both immediately following FTX's filing for bankruptcy protection in the United States in November of last year and as recently as early September.
"Coinbase's interest in FTX Europe demonstrates the growing importance of derivatives to its global business plan as spot trading volumes have tumbled during the bear market," the magazine said, noting that the talks never reached a late stage and quoting a source familiar with the situation who said that the American company is no longer pursuing such a deal.
The report also notes that, according to data from the crypto analytics firm Kaiko Research, financial instruments based on the value of cryptocurrencies like bitcoin (BTC) and ethereum (ETH) now make up a sizeable portion of cryptocurrency trading, reaching a volume six times larger than the volume of spot trades in the second quarter of 2023.
While the EU has yet to develop its own full set of regulations under the recently adopted Markets in Crypto Assets (MiCA) law, the regulatory future of cryptocurrency derivatives in the United States is still uncertain. Before FTX's demise, FTX Europe was the only platform on the Old Continent selling perpetual futures, a type of cryptocurrency derivative, which was purchased for $376 million in 2021.
Coinbase announced its plans to grow in nations that are adopting clear regulations for the industry, including in Europe, in a blog post earlier this month. This is in contrast to the United States, which has been enforcing both new and existing regulations through courts, according to the exchange.
The financials of FTX Europe were also referenced by Fortune, showing that the platform kept gaining tens of thousands of members up to the collapse of its parent business. The value of FTX's European license has attracted interest from more prospective bidders, including a cryptocurrency company by the name of Trek Labs, while the FTX debtors' estate is selling off portions of the company. According to a different source cited in the report, the application deadline has been extended to September 24.
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