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 September 11 – 17

Peter B. Stoneberg
September 17, 2023

Bitwave, a provider of enterprise finance solutions for digital assets, announced on September 14, 2023, that it has acquired Gilded, a crypto payments and reporting platform. The acquisition is expected to help position Bitwave as a strong competitor in the Web3 payments industry.


The integration of Gilded’s technology will enhance Bitwave’s Web3-focused financial stack, allowing enterprise teams to manage crypto payments and invoices to various stakeholders while also tracking expenses. Bitwave CEO and Co-Founder Pat White believes that crypto payments are the future, and that Bitwave is well-positioned to help enterprises transition to this new payment economy. This acquisition looks like a good move for Bitwave, as it comes at a time when crypto payments are gaining traction among enterprises.


Spielworks, a blockchain gaming company, has acquired Atomic Hub, an NFT marketplace. The deal brings together two leading players in the blockchain gaming and NFT markets, and it is expected to have a positive impact on the WAX ecosystem.   The WAX ecosystem is a blockchain platform that is specifically designed for gaming and NFTs. The WAX ecosystem includes a variety of products and services, such as the Wombat wallet, the Top 15 NFT staking game Wombat Dungeon Master, and this acquisition will add the Atomic Hub NFT marketplace to their offerings.


Spielworks plans to leverage Atomic Hub’s existing developments to enrich its NFT-related offerings, and it also hopes to bring more of its users to explore Atomic Hub on other networks, such as EOS and Immutable X.