Kraken Acquires A UK Based Crypto Futures Market For Atleast $100 Million
Kraken, a bitcoin exchange platform, announces the acquisition of Crypto Facilities, the very first regulated firm in the world to offer futures on crypto assets. This move has placed Kraken as the 46th largest bitcoin exchange by adjusted volume.
The announcement by Kraken does not disclose the exact amount involved in the acquisition, it just used the term “nine figures.” Well, as per that, the deal is at least worth $100 million.
Crypto Facilities is a London-based company that is overseen by the UK’s Financial Conduct Authority. Reports suggest that the firm will stay in London only, “benefiting from the regulatory oversight of the Financial Conduct Authority, one of the world’s most forward-looking and innovation-focused regulators.” Even with the company staying put in London, the future in all likeliness will be a Kraken-branded product.
Kraken foraying into the Bitcoin Derivatives
The move could be chalked off as Kraken’s response to the growth of # 10 competitor, Huobi Global’s derivatives market that was launched in November last year. Reportedly, Huobi’s crypto derivatives market crossesed the $20 Billion mark in trades, in just two months.
While Kraken could have created its own derivatives platform, it chose to adopt Google’s approach, acquire the best you can and put it to work for your clients. Kraken will now join the league of Huobi and BitMEX in offering derivatives.
Since the prices of Crypto assets are derived from spot trading, derivatives markets have limited effect. However, sentiments expressed on such derivatives platforms could certainly influence the prices of assets. For instance, if derivatives value an asset is higher or lower by hundreds of dollars than the general view about that asset will probably change.
Similar to that in the traditional stock world, the virtual derivatives exchanges have unlimited potential. Contracts on Bitcoin and altcoins offer high volatility and potential for profit. When combined with leveraged trading, the volume on such exchanges can be extreme.
Revenue sharing program by Crypto Facilities
The firm recently announced a revenue sharing program for its clients who provide liquidity. The share of the revenue will be calculated weekly, based on the contributions of clients.
“The RSP measures clients’ contribution to the platform during one week intervals, starting at 12 pm UTC each Friday and will initially run for 10 weeks. At the end of each interval, each client’s revenue share is calculated and paid out.”
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