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One of the worlds largest cryptocurrency exchanges, Coinbase, announced on Thursday that it has agreed to acquire Dubai-based crypto derivatives exchange Deribit, for $2.9 billion, marking the largest deal in the crypto sector to date.
The acquisition, announced on Thursday, involves a substantial financial commitment, with $700 million in cash and 11 million shares of Coinbase Class A common stock as part of the deal.
The transaction is anticipated to close by the end of the year, a timeline that has already positively impacted Coinbases stock, with shares rising more than 5% toward the $206 mark following the announcement.
Greg Tusar, Coinbases vice president of institutional product, emphasized the strategic importance of the deal, stating that it enhances Coinbase’s ability to compete with major players like Binance.
While Coinbase dominates the US market for cryptocurrency trading, it has historically held a smaller share in the global arena, where a significant portion of trading activity occurs on Binance .
Deribit has established itself as a powerhouse in the crypto derivatives space, facilitating over $1 trillion in trading volume last year and boasting approximately $30 billion in current open interest on its platform.
Were excited to join forces with Coinbase to power a new era in global crypto derivatives, said Deribit CEO Luuk Strijers in a statement. He highlighted that this acquisition will not only accelerate the growth of both companies but also provide traders with enhanced opportunities across various trading products, including spot, futures, perpetuals, and options, all under the Coinbase brand.
Tusar noted that Deribits consistent track record of generating positive adjusted EBITDA is a key factor in the acquisition, suggesting that the combined entity will likely see increased profitability.
One of the things we liked most about this deal is that its not just a game changer for our international expansion plans it immediately diversifies our revenue and enhances profitability, he told CNBC.
This acquisition comes at a time when the cryptocurrency industry is benefiting from a supportive regulatory environment, with President Donald Trumps administration taking a pro-crypto stance.
This regulatory tailwind has fueled an increase in mergers and acquisitions within the sector. For instance, in March, US-based crypto exchange Kraken announced its acquisition of NinjaTrader for $1.5 billion, and last month Ripple Labs agreed to buy prime broker Hidden Road.
Featured image from DALL-E, chart from TradingView.com