- Coinbase acquires Deribit for $2.9B, marking the largest deal in crypto industry history.
- Deribit recorded over $1 trillion in trading volume last year with $30B in open interest.
- Coinbase aims to lead global crypto derivatives with Deribit’s options and futures platform.
Coinbase intends to purchase the largest crypto derivatives mid-scene from Dubai Derivatives for $2.9 billion. This purchase is the biggest deal in the cryptocurrency industry so far. The transaction will comprise $700 million (in cash) and 11 million shares of Coinbase’s Class A common stock. The agreement is expected to be finalized by the end of this year. After the announcement, Coinbase shares spiked by almost 6%.
The consolidation makes Coinbase the market leader in global crypto derivatives, namely crypto options and futures trading. It also positions Coinbase as a competitor to Binance, a significant market player in international trade, while controlling a higher trading volume.
Impact on Coinbase’s Market Position and Future Growth
In its move to capture the market for crypto derivatives, Deribit’s acquisition by Coinbase allows the company to expand its market share in the US and worldwide. Greg Tusar, Vice President of Institutional Products at Coinbase, indicates that the deal enables the company to be an international leader in crypto derivatives based on open interest and options volume. Deribit boasts a fantastic history, having executed over $1 trillion of trading volume in the preceding year, and $30 billion of open interest on the platform now.
Deribit CEO Luuk Strijers himself signalled excitement over the merger, explaining how the scaled team of Deribit and Coinbase will offer traders more trading opportunities in a range of crypto trading products such as spot, futures, perpetual, and options. Deribit’s steady positive adjusted EBITDA delivery is likely to indicate the combined entity’s growth and a positive impetus on profitability overall.
Expansion of Revenue Streams and International Growth
Coinbase’s takeover of Deribit has also been consistent with its vision to broaden its revenue sources and its efforts to enter into foreign markets. As Tusar says, the deal should bring significant advantages to Coinbase’s international expansion, and the expanded acquisition of Deribit’s strong, profitable business will only strengthen the company’s financial growth.
By structuring the transaction as a cash-and-stock transaction, Coinbase can maintain its financial flexibility and continue with further M&As if necessary. As of December 31, Coinbase had $8.5 billion in cash on its balance sheet, a nice cushion to play with in a sector that is slowly getting increasingly crowded.
The Growing Crypto M&A Trend
Deribit is just one example of a growing trend in the cryptocurrency industry as big players have increasingly been buying small ones. This is during a time of regulatory support of the industry, especially the pro-crypto White House.
Among other significant crypto mergers in the last few months are Kraken’s $1.5 billion takeover of NinjaTrader and Ripple’s acquisition of Hidden Road. Such transactions indicate the increasing coming-of-age and consolidation of the crypto market.
