Coinbase Acquires Futures Exchange FairX
Coinbase Acquires Futures Exchange FairX

On January 12th, 2022, Coinbase announced the acquisition of FairX, a
Commodities Futures Trading Commission (CFTC) registered Designated
Contract Market (DCM) offering futures. Architect Partners served as the
financial advisor for FairX.

FairX operates a regulated futures exchange for retail investors. The
company offers 1) straightforward and retail user-friendly products 2)
discounted fees compared to a traditional futures exchange, 3) retailfocused products requiring less capital, and 4) committed market makers
enabling strong liquidity. FairX launched in June 2021 and currently offers
futures on two index products in two sizes: the Bloomberg US Large Cap
Index Futures and SuperTech Index Futures, as well as Micro Crude Oil
Since launch, FairX had an average daily volume across its products of about
9,000 contracts. Based in Chicago, FairX was founded in 2019 by Neal Brady,
CEO and co-founder of ErisX, acquired by CBOE (M&A Alert) last year,
Harsha Bhat, CTO and previous SVP/CTO of State Street’s GlobalLink trading
platforms, and Chairman Clifford Lewis. FairX raised over $27 million in three
funding rounds. Notable investors include Hyde Park Venture Partners, TD
Ameritrade, XTX Ventures, Battery Ventures, Limerick Hill, and Virtu

We are seeing a trend of crypto-native firms acquiring regulated entities to
expand their offerings of sophisticated financial products. Both retail and
institutional clients demand regulatorily compliant solutions, but current
regulation is often disjointed as crypto can be an awkward fit for existing
regulatory structures. There has been much discussion regarding a
straightforward set of rules for crypto, most likely tweaks to existing
frameworks. Buying regulated entities therefore provides regulatory
“insurance” for crypto firms while future regulations are being
implemented. Coinbase has done this in the past, via purchases of three
SEC-licensed firms. FTX’s October 2021 acquisition of LedgerX is another
example, absorbing LedgerX’s 3 CFTC licenses of DCM, Swap Execution
Facility, and Derivatives Clearing Organization. We expect this approach to
accelerate in the next twelve months as crypto-native firms continue to
integrate with traditional financial services.

There are several drivers for this acquisition. First, FairX provides Coinbase
with a crypto derivatives regulatory framework for both retail and
institutional investors in the US. FairX is a CFTC registered DCM, and will be
Coinbase’s first entity fully regulated by CFTC (Coinbase applied for an
Futures Commission Merchant license in September of 2021, but has not yet
been approved). Second, it allows simplified access to futures to their
sizable retail client base. Lastly, it furthers Coinbase’s institutional product
line. Institutions need to hedge positions and hedging Bitcoin or Ethereum
is done under the commodity framework in the US.


Laser Digital Acquires Elysium Technology Group

Michael S. Klena
June 30, 2023

Laser Digital Acquires Elysium Technology Group for an undisclosed amount.

Transaction Overview

On June 29th, 2023 Laser Digital announced the acquisition of the post-trade solutions provider for FX & digital assets, Elysium Technology Group. 


Target: Elysium Technology Group

Elysium Technology Group provides post-trade solutions for the FX & digital asset industries. Elysium has three core products, including MatchHub, a centralized trading hub using connective software to settle, match, reconcile, and net trades. MatchHub also offers developer tool kits, allowing users to configure the software to their needs. Mission Control is a live, cloud-based dashboard for screening and monitoring digital assets & FX positions with connectivity to over 100 exchanges. The firm also has an enterprise database management platform, RiskDB, that focuses on smoothing post-trade workflows and reducing processing costs. As of 2019, Elysium was processing $30B of trading volume per day for FX assets. 


Elysium’s closest competitors include other infrastructure providers in the trade lifecycle for FX and digital assets, such as Osttra, TradeNeXus, GlobalLink, LSEG’s SwapAgent, LCX, CrossTower, BlockFills, KeyRock, Etana, and Paxos’ itBit. 


The company was founded in 2007 in Stamford, Connecticut by Chairman Andy Siciliano, Managing Director Ed Mount, and CTO Mark Rosenfeld, Elysium currently has over 20 employees, with offices in Connecticut, Virginia, and Illinois. Elysium was originally formed in 2002 as a private trading firm, growing up to $230M AUM, before the group pivoted into technology solutions in 2007. The firm has no disclosed capital raised to date. 


Buyer: Laser Digital 

Laser Digital is the digital asset-focused arm of Nomura, a large Japanese financial institution with $17B in TTM revenue and a $12B market capitalization. Laser Digital offers asset management, liquidity, and market-making solutions to their digital asset clients. In addition, the firm makes venture investments in digital asset-related companies. Laser Digital’s trading solutions (liquidity and market-making) are focused on institutional customers, such as pensions, hedge funds, and family offices.


Laser Digital was launched in September 2022 and is led by CEO Jez Mohideen, who previously ran Global Markets EMEA at Nomura, and Executive Chairman Steve Ashley, who was previously the Global Head of the Wholesale Division at Nomura. The firm currently has an estimated 70 employees and is based in Zurich, Switzerland. 


This is the first acquisition by Laser Digital, although the group has made minority investments in two digital asset-related firms. 


Transaction Parameters

Laser Digital acquired Elysium Technology Group for an undisclosed amount. Elysium will operate as a subsidiary and affiliate of Laser Digital under the name of Elysium LD Technology, Inc. The transaction is expected to close imminently. 


Comparable crypto trading infrastructure transactions include Bakkt | Apex Crypto ($200M M&A Alert) Coinbase | FairX ($275M M&A Alert), FTX | Bitvo (ND M&A Alert), | Altonomy ($250M M&A Alert), Amber Group | DeCurret (ND), DHS Consulting | Allentro ($575M ), Exegy | Vela (ND), and SBI Financial Services | B2C2 (ND).


Strategic Rationale

This is a significant announcement that marks Laser Digital’s commitment to FX and digital assets and emphasizes the importance of owning post-trade functionality that can facilitate multiple asset classes. Laser Digital is acquiring a platform that provides “air traffic control” for its capital markets business that includes trade settlement, real-time position reporting, and a securities database with digital asset symbology.


As the roles market participants play in digital asset markets continue to evolve (see the separation of exchanges, brokers, and custodians), Laser Digital is positioned as a key FX and digital asset post-trade infrastructure provider with traditional financial institution roots, which is the counterparty profile that institutions want to do business with.


Finally, institutional-grade, cross-asset functionality will drive client decision-making, as the demand to participate in digital assets increases. 


Architect Partners’ Observations

The digital asset post-trade process has not been elegantly solved.  Equities have dominant clearinghouses like DTCC to make the process efficient and the risk well-managed.  Digital asset settlement looks like FX settlement where it is peer-to-peer with its associated higher risk of failure.  We are seeing more firms try to solve this, like the newly announced BitGo Go Network.  Many are offered by a custodian allowing pre-trade credit and net settlement for assets that are under custody. Elysium bridges directly to FX and futures so takes it a step further by allowing cross-asset trade settlement.  


All of these settlement solutions need volume and scale.  The winner will not necessarily be the best technology, but the one that can sign up participants and scale the quickest. We see firms continuing to attract M&A interest and capital into this specialized but critical segment.



PitchBook, Elysium Website, Laser Digital Website, Press Release