Why Coinbase and Crypto.com Wanted to Buy FTX Europe

Unraveling the story of FTX Europe’s potential acquisition by giants Coinbase and Crypto.com, and why it fell through.

Sam Bankman Fried looking nervous in front of the department of justice building.
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  • Coinbase and Crypto.com showed acquisition interest in FTX Europe.
  • FTX Europe’s key license made it a valuable asset.
  • Crypto.com denies any ongoing interest. 

In the volatile landscape of cryptocurrency, even a company facing bankruptcy can possess assets that are golden tickets for other major players. FTX, despite its financial woes, was no exception. Recent revelations indicate that industry giants Coinbase and Crypto.com were keenly interested in acquiring FTX Europe, primarily thanks to its coveted derivatives license. 

FTX Europe and the Rise of Derivatives Trade

As crypto spot trade took a downturn since the FTX collapse, crypto exchanges had to adapt. To stay profitable, exchanges turned to the growing and lucrative derivatives market.  

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These complex financial instruments, which derive value from underlying assets like Bitcoin or Ether, were on the upswing in 2023. Slowly but surely, they began to overshadow traditional spot trading. 

The derivatives market saw such a surge that, by the second quarter of 2023, its trading volume was six times larger than that of spot trading. Key players in the arena were eager to secure their place in the European derivatives market. For that reason, several major players contemplated acquiring FTX Europe. 

On Friday, September 21, Fortune reported that Coinbase and Crypto.com contemplated acquiring the European arm of the bankrupt FTX exchange. The main reason for this was the critical regulatory license the exchange still held. 

Why Coinbase Wanted to Acquire FTX Europe

For industry giant Coinbase, FTX Europe emerged as a beacon of opportunity in a sea of potential acquisitions. Thanks to its more friendly regulations towards crypto derivatives, Europe presented a tantalizing market compared to the US. 

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What is more, FTX had managed to successfully navigate the intricate web of regulations in Europe, giving it a clear competitive advantage. Specifically, its Cypriot license granted the platform the exclusive right to offer perpetual futures, a crypto derivative that had gained immense popularity. 

If Coinbase acquired FTX Europe, it would also acquire its license, solidifying its foothold in the burgeoning derivatives market.

Still, despite these factors, the acquisition talks never reached fruition. Crypto.com, which was once interested in FTX Europe, denied any ongoing interest.

On the Flipside

  • FTX Europe’s parent company had faced bankruptcy, which could introduce potential liabilities or reputational risks for any acquirer. 
  • The European crypto regulatory environment is still in flux, and any changes could impact FTX Europe’s future value.

Why This Matters

For crypto traders and industry stakeholders, understanding the strategic moves of giants like Coinbase offers insights into the growing market of derivatives trading. This trend will affect all crypto exchanges. 

Read more about the increasingly popular crypto derivatives:
Crypto Derivatives Explained: What They Are, How They Are Traded, And Their Best Practices

Read more about  FTX user claims:
What’s Next for FTX Claims as User Deadline Approaches?

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
David Marsanic

David Marsanic is a journalist for DailyCoin who covers the intersection of crypto, traditional finance, and government. He focuses on institutionalized crypto entities like major cryptocurrency exchanges and Solana, breaking down complex topics into easy-to-understand writing. David's prior experience as a business journalist at various crypto and traditional news sites has enabled him to maintain a critical approach to news while adhering to high journalistic integrity standards.