Digital assets and investing platform Kraken has announced it has acquired Small Exchange, which is described as a CFTC-licensed Designated Contract Market (DCM), from IG Group., for $100 million. According to Kraken, this latest update aims to establish the foundation for the crypto trading platform to launch a “fully” U.S.-native derivatives product suite, enabling a “deep, sophisticated” onshore venue in the world’s largest capital market.
The acquisition of Small Exchange advances Kraken’s mission to build a more unified, high-performance trading environment.
A DCM authorizes Kraken, under the oversight of the Commodity Futures Trading Commission (CFTC), in order to design and create markets for exchange-listed derivatives in the United States.
Arjun Sethi, co-CEO of Kraken said that their acquisition of a CFTC regulated Designated Contract Market creates the foundation for a new generation of United States derivatives markets.
Sethi added that it is mean for scale, transparency, as well as greater overall efficiency.
He further noted that this step connects spot, futures, and margin products inside a single regulated liquidity system, “reducing fragmentation, lowering funding latency, and bringing onshore the kind of access and performance that has mostly existed offshore.”
Under CFTC oversight, Kraken is now able to integrate clearing, risk, and matching into one environment that meets the “same standards as the largest exchanges in the world.”
As stated in the update, this acquisition is said to be part of a larger build of global infrastructure.
Kraken operates regulated derivatives venues in the UK, the EU, and the US.
The system spans major fiat currencies and various digital and traditional assets, all within “one architecture.”
This update follows a series of milestones in Kraken’s U.S. derivatives expansion.
Earlier, Kraken acquired NinjaTrader, a U.S. futures platform, enabling U.S.-based clients to trade CME-listed cryptocurrency futures, alongside spot crypto in a unified interface.
In October of this year, Kraken enhanced this offering to include a range of contracts, covering equities, FX indices and commodities.
This acquisition is said to continue Kraken’s ongoing investment in derivatives markets.
In 2019, Kraken acquired Crypto Facilities, a UK FCA-regulated Multilateral Trading Facility (MTF), and introduced Europe’s regulated crypto futures offering under the MiFID II framework.
By securing the licensing and infrastructure, Kraken explained that it is laying the groundwork for “institutional-grade markets” as crypto matures.
Established back in 2011, Kraken says that it allows clients trade over 450 digital assets, traditional assets like U.S. futures and U.S.-listed stocks and ETFs, as well as 6 different national currencies.
Kraken’s suite of products and services now reportedly includes the Kraken App, Kraken Pro, the Krak App, Kraken Institutional, Kraken’s on-chain offerings as well as the Ninja Trader retail trading platform.
Across these product offerings, customers are able to purchase, sell, stake, earn rewards, send and receive assets, custody holdings, and also gain access to trading, derivatives, portfolio management tools.