Tonight, Coinbase was set to announce its Q1 2025 financial report, but the market first received news of its acquisition of the largest crypto options platform, Deribit.
On May 8th, the leading US cryptocurrency exchange Coinbase officially announced the acquisition of the leading crypto options trading platform Deribit. The acquisition aims to integrate spot, futures, and options trading businesses to build a more comprehensive crypto asset trading ecosystem. According to the official announcement, the total acquisition price is approximately $2.9 billion, including $700 million in cash and 11 million Coinbase Class A common shares, with the final transaction price to be adjusted according to convention and expected to be completed by the end of this year.
Coinbase emphasized in its statement that through this acquisition of Deribit, the company will become a global leader in crypto derivatives by open interest and options trading volume. Deribit currently has about $30 billion in open interest and over $1 trillion in trading volume, and its addition will significantly enhance Coinbase's global market leadership and complement its derivatives product layout with its US futures business and international perpetual contract business.
Coinbase stated that this acquisition is a key step towards its vision of creating a one-stop platform integrating spot, futures, perpetual, and options trading, which will help improve capital efficiency.
After the transaction, Deribit will immediately enhance Coinbase's profitability and bring more diversified and countercyclical trading revenue. Compared to spot trading, which is more affected by market volatility, options trading income is typically more stable, as traders use options for risk management in both bull and bear markets.
Why Deribit, the King of Crypto Options Trading?
Deribit was founded in 2016, initially established in the Netherlands, as a platform focused on digital currency derivatives.
As the world's first platform to launch digital currency options, Deribit has now become the most active global crypto options trading platform, occupying over 80% of the options market share. Meanwhile, Deribit has long been among the top ten global trading platforms in digital currency futures trading volume and positions.
Its platform offers margin trading for multiple currencies including BTC, ETH, USDT, and USDC, covering spot trading, coin-margined and USDT-margined perpetual contracts, futures contracts, and options contracts. Notably, Deribit provides futures and options contracts with rich terms, including futures of different cycles and the most comprehensive daily, weekly, monthly, and quarterly options in the market.
In January 2023, Deribit moved its headquarters to Dubai and subsequently obtained a Full Market Product license under the Dubai Virtual Asset Regulatory Authority (VARA). Additionally, Deribit has implemented the FATF's "Travel Rule", strengthened anti-money laundering measures, and launched advanced custody solutions with partners like Fidelity, Zodia, and Copper.
In fact, as early as January this year, Bloomberg cited sources saying Deribit had acquisition intentions. Deribit also invited Financial Technology Partners LLC (FT Partners) to assess potential buyers, stating that Deribit's valuation could exceed $5 billion. Both Kraken and Coinbase had expressed interest.
On March 22nd, Bloomberg reported that Coinbase was in deep negotiations to acquire the derivatives crypto trading platform Deribit. Some sources indicated that both parties had informed Dubai regulatory authorities about the negotiations, as Deribit holds relevant licenses in Dubai.
Coinbase's Acquisition Calculations
For Coinbase, acquiring Deribit will bring multiple strategic benefits. First, after the transaction, Deribit is expected to immediately enhance Coinbase's profitability and bring more diversified and countercyclical trading revenue.
As the Q1 financial report is about to be published, Wall Street institutional analysts expect Coinbase's performance to be below expectations, with low retail trading potentially impacting its most profitable business segment.
According to FactSet data, the company is set to release its Q1 report after Thursday's market close. Analysts predict its EPS will drop from $2.26 in the last quarter to $1.93, with revenue declining from $2.27 billion to $2.1 billion. This is significantly lower compared to the $4.40 EPS and $1.2 billion revenue from the same period last year. Trading volume for the quarter is expected to reach $403.8 billion, slightly lower than the $439 billion in the last quarter.
Therefore, announcing the acquisition at this timing may have related considerations. Compared to spot trading, which is more susceptible to market fluctuations, options trading income is typically more stable, as traders use options for risk management in both bull and bear markets.
Secondly, this acquisition is another important strategic move for Coinbase, following previous successful acquisitions like Xapo (launching Coinbase Custody), Tagomi (launching Coinbase Prime), FairX (foundation for Coinbase Derivatives Exchange), and One River Digital (building Coinbase asset management business).
How Does the Market View This Historic Acquisition?
The community generally holds a positive attitude towards this acquisition. Real Vision co-founder Raoul Pal believes that Coinbase's acquisition of Deribit is not only an important opportunity for itself but also significantly reduces a potential systemic risk - previously, the options market was dominated by a smaller trading platform, and a black swan event could cause serious problems with high leverage. Overall, Pal considers this good news beneficial to all parties.
Market analysis also points out that based on Deribit's trading volume of $1.2 trillion in 2024, assuming an average fee of 0.035%, its annual revenue would be around $420 million. Coinbase's acquisition at $2.9 billion is equivalent to acquiring this market share at about 6.9 times the sales multiple, which appears more cost-effective compared to Robinhood's 15 times sales multiple.
Further analysis indicates that for US-based Coinbase, which previously had limited involvement in derivatives like options and futures due to regulatory restrictions, the current shift in US regulatory attitudes makes this an excellent strategic opportunity to pave the way for launching more comprehensive derivatives trading in the US market.
Some in the community also note that Deribit, as a profitable and stable top-tier platform, can easily complement Coinbase's global compliance layout, high-net-worth client system, and USDC settlement system. In the future, it may even be possible to directly open high-quality options trading to institutions and US users through Coinbase Prime, further expanding market share.
At a time when global derivatives are increasingly becoming the core revenue source for trading platforms, Coinbase's acquisition of Deribit to seize the high ground will undoubtedly reshape the crypto derivatives market landscape and lay a solid foundation for the upcoming bull market. Whether it can successfully bring derivatives business into the US domestic market remains to be seen pending further regulatory clarity.
