Crypto Consolidation: FTX.US Expands Into Bitcoin Derivatives With Key Acquisition

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Brett Harrison, President of FTX.US

(Kitco News)Bitcoin futures trading is gaining prominence in the United States. Not only are Wall Street firms such as Citigroup gearing up to potentially enter the fray, but cryptocurrency-native firms are also muscling their way in with the blessing of regulators.

Most recently, cryptocurrency exchange FTX.US announced it was acquiring the parent company of CFTC-regulated LedgerX, Ledger Holdings. The deal, the terms of which were not revealed, grants the U.S. affiliate of FTX Trading a CFTC license to operate a regulated crypto derivatives trading platform for U.S. investors.

Brett Harrison, President of FTX.US, explained to Kitco how demand is already there, saying:

“The majority of global cryptocurrency volume trades through derivatives. There is deep demand from US-based institutional and retail clients to have direct access to regulated crypto futures and options markets.”

He went on to explain that M&A in the cryptocurrency space signals that the industry is growing up.

“Consolidation is absolutely a sign that the crypto industry is evolving and maturing. This acquisition marks an inflection point for FTX.US and will allow us to compete with other more established exchanges in the space,” said Harrison.

One of those exchanges is the Chicago Mercantile Exchange (CME), whose bitcoin futures open interest recently hovered at USD 1.6 billion.

Trading Volume Snapshot

FTX Trading, which is run by 29-year-old crypto billionaire Sam Bankman-Fried and of which FTX.US is an affiliate, is a crypto derivatives exchange. The firm reportedly experiences monthly derivatives trading volume of USD 500 billion. It is one of the largest crypto exchanges based on this metric.

In the first half of 2021, FTX Trading saw volume of $1.875 trillion, and it boasts average daily trading volume of $0.9 billion. FTX.US, for its part, recently saw its daily spot volume shoot up from $1 million to $350 million as it goes head-to-head with the likes of Coinbase, Kraken and Gemini.

“It will take time and coordination with the CFTC to bring the product line and innovation to FTX.US that we aspire to. But we think when that happens, we will see FTX.US become a serious contender for global crypto derivatives volume,” Harrison explained.

Bitcoin Futures Trading

FTX.US appears to be making a bitcoin futures push just as the stars are once again beginning to align for the market. Lennard Neo, who spearheads research at Stack Funds in Singapore, to Kitco about the FTX.US/LedgerX deal, saying,

“Futures open interest has shot up more than 30% in the past month as more investors became risk-on as prices picked up over the past weeks. Volume has also picked up over the same period and similar to what happened since Q3 last year, we expect this growth trend to continue. Coupled with the reasonably attractive low funding rates for investors, the momentum should persist.”

Neo, in a report, discussed how bitcoin’s recent ascent to USD 50K was accompanied by “May’s CME futures gap closure.” As a result, he is bracing for potential headwinds for bitcoin in the near term and called for “further consolidation around these levels before the next upside push is realized.” At last check, the bitcoin price was hovering at USD 47,517, down about 1%.

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