Cryptocurrency exchange Kraken has made a strategic move to bolster its derivatives trading capabilities in the United States with the purchase of Small Exchange for $100 million. This designated contract market maker (DCM) acquisition was confirmed by Kraken recently and comes on the heels of their earlier investment of $1.5 billion in NinjaTrader.

With Small Exchange’s CFTC license, Kraken is positioned to enhance its product offerings for derivatives trading within the U.S. market.

“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,” - Arjun Sethi, co-CEO of Kraken.

The acquisition aims to forge a unified crypto trading platform, paving the way for a new landscape in U.S. derivatives. The DCM license allows Kraken to effectively combine spot, futures, and margin trading products under a single regulated framework, which will streamline execution and address existing inefficiencies in the trading landscape.

Kraken’s recent efforts in the derivatives sector are part of a broader strategy including previous acquisitions aimed at establishing a solid derivatives infrastructure. In July, the exchange launched its derivatives platform aimed at U.S. traders, riding on the momentum gained from the NinjaTrader acquisition.

With trading volumes in the derivatives space showing resilience compared to spot trading—which has seen notable declines—Kraken is betting on the continued growth of the derivatives market. Recent trends show that while spot trading dipped significantly, the derivatives sector only saw a minor decrease, suggesting a shifting focus in trading patterns.

Overall, Kraken is positioning itself at the forefront of the burgeoning derivatives market, aiming to provide innovative solutions for traders and enhance the overall trading experience.

For insights into the dynamic crypto landscape, stay tuned for further developments.