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.

Crypto M&A Snapshot

Week of August 7 – August 13

Peter B. Stoneberg
August 13, 2023

Deutsche Börse Group is acquiring the remaining shares it does not already own of FundsDLT, a blockchain-based platform for fund distribution. The acquisition will make FundsDLT an integral part of Clearstream, Deutsche Börse’s post-trade infrastructure provider. The integration of FundsDLT into Clearstream enables blockchain-based end-to-end fund transactions, backed by Clearstream’s fund processing platform allowing more efficient, scalable and faster fund investing using the power of the blockchain.


FundsDLT was started In March 2020 when Deutsche Börse Group joined forces with the Luxembourg Stock Exchange, Credit Suisse Asset Management and Natixis Investment Managers to invest in and further develop FundsDLT as the first platform to carry out fund subscription on blockchain infrastructure. Since then it has been used to successfully distribute funds in several locations across Europe and Asia. The former shareholders Credit Suisse Asset Management together with UBS Asset Management as well as Natixis Investment Managers will remain as clients, helping Clearstream drive the fund distribution use case further.


The acquisition is a significant step for Deutsche Börse in its digital transformation strategy. It shows the company’s commitment to using blockchain technology to improve the efficiency and transparency of the fund distribution process. With more than 11,000 employees, Deutsche Borse operates Vestima, the world’s largest fund processing platform which provides order execution, settlement and custody services for more than 230,000 funds. They also own Fund Centre, one of the leading European fund distribution platforms which provides access to over 72,000 funds.  They believe that FundsDLT will streamline a range of repetitive fund operational activities by using blockchain to automate several processes securely.


Terms were not disclosed and the acquisition is expected to be completed in the fourth quarter 2023 or the first quarter 2024, subject to regulatory approval.