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Kraken buys Small Exchange in $100 million deal to expand U.S. derivatives operations

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Crypto exchange Kraken has agreed to acquire Small Exchange from IG Group for $100 million, marking a major step toward building a fully U.S.-based derivatives platform that can serve both retail and institutional traders.

Small Exchange holds a Commodity Futures Trading Commission (CFTC) license as a designated contract market, giving Kraken access to a regulated venue for offering futures and options — products that have become central to the digital asset industry’s push for mainstream legitimacy.

“Under CFTC oversight, Kraken can now integrate clearing, risk and matching into one environment that meets the same standards as the largest exchanges in the world,” said Arjun Sethi, Kraken’s co-CEO.

The acquisition reflects a growing trend of digital asset firms entering traditional capital markets, as cryptocurrencies gain wider acceptance and investors demand more sophisticated risk-management tools. Analysts say institutional adoption is accelerating as regulated crypto derivatives gain traction.

“Digital asset firms are no longer content being sideshow players,” said Michael Ashley Schulman of Running Point Capital Advisors. “They aim to wrest seats in the core capital markets ecosystem.”

Kraken described the acquisition as a strategic move to establish “institutional-grade markets” as crypto matures under a more crypto-friendly regulatory climate in the U.S. under President Donald Trump.

Earlier this year, Kraken also announced a $1.5 billion deal to acquire NinjaTrader, another retail futures trading platform, strengthening its position in the fast-growing derivatives segment.

Coinbase to Launch CFTC-Compliant Perpetual Futures Trading in U.S.

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Coinbase announced plans on Thursday to introduce perpetual futures trading in the United States, with the product designed to comply with regulatory standards set by the Commodity Futures Trading Commission (CFTC). The move represents a significant expansion of the crypto exchange’s derivatives offerings as the broader market anticipates lighter regulation and displays renewed investor risk appetite.

“We recently launched first-of-its-kind 24/7 futures trading, and I’m excited to share that we’ll soon be launching CFTC-compliant perpetual futures trading in the U.S. as well,” said Max Branzburg, Coinbase’s vice-president of product, speaking at the State of Crypto Summit in New York.

Perpetual futures are a form of crypto derivatives that allow traders to speculate on token prices without an expiry date. These contracts provide continuous trading access, often with high leverage, and have grown in popularity as fast-moving markets attract both institutional and retail traders seeking to hedge risk, amplify returns, or speculate on price movements without holding the underlying digital assets.

The expansion comes amid heightened competition among crypto exchanges racing to offer complex products that were once limited to sophisticated market participants. Coinbase’s decision to ensure compliance with CFTC regulations may also help position the exchange favorably with U.S. regulators, as the crypto industry continues to face scrutiny from multiple government agencies.

Coinbase Q1 Profit Drops Despite Revenue Gains as Expenses Surge 51%

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Coinbase reported a decline in first-quarter profit on Thursday, as a sharp 51% increase in operating expenses outpaced gains in its core revenue streams, leading to a 3% drop in shares during extended trading.

While the cryptocurrency exchange saw total revenue climb to $2.03 billion, up from $1.64 billion a year earlier, it fell short of analysts’ expectations of $2.1 billion, according to data from LSEG.

The company’s adjusted net income dropped to $526.6 million, or $1.94 per share, down from $679.2 million, or $2.53 per share, in the same quarter last year. The decline comes as Coinbase ramps up marketing spending and took a hit on crypto assets held for operations, contributing to its ballooning expense total of $1.3 billion.

Revenue Breakdown:

  • Transaction revenue: Rose 17.3% to $1.26 billion

  • Subscription and services revenue: Jumped 37% to $698.1 million

Despite the solid performance in its transaction and subscription units, the company struggled to maintain profitability amid higher spending and broader market volatility triggered by President Trump’s erratic trade policies, which have unsettled investors and driven caution in riskier assets like cryptocurrencies.

The results come on the same day Coinbase announced a $2.9 billion acquisition of Deribit, a major crypto derivatives exchange, as part of a strategy to expand into the crypto options market and diversify revenue sources beyond spot trading.

The combination of increased costs and geopolitical uncertainty underscores the challenges Coinbase faces in balancing growth investments with margin pressure as it seeks to capitalize on expanding institutional interest in digital assets.