Kraken signs US$100 million deal for Small Exchange to bulk up U.S. derivatives business

The Kraken logo on a smartphone arranged in Hastings-on-Hudson, New York, U.S., on Friday, Feb. 10, 2023.

Crypto heavyweight Kraken said on Thursday it has acquired futures exchange Small Exchange from IG Group for US$100 million, paving the way to launch a fully U.S.-based derivatives suite.

Small Exchange is a U.S. Commodity Futures Trading Commission-licensed designated contract market, giving Kraken a regulated venue to offer futures and options to both retail and institutional clients.

“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 said in a statement.

Once the preserve of banks and brokers, the derivatives market is drawing digital asset firms looking for liquidity and risk management.

The trillion-dollar crypto market has moved beyond spot trading, with exchanges and investors seeking institutional-grade tools such as futures, options and tokenized assets.

Crypto-linked futures and options have been among the fastest-growing segments as investors seek to manage risk.

“By securing the necessary licensing and infrastructure today, Kraken is laying the groundwork for institutional-grade markets as crypto matures,” the company said.

The deal comes as a more crypto-friendly regulatory tone under U.S. President Donald Trump encourages digital asset firms to expand in the United States with promises of clearer rules.

Earlier this year, Kraken agreed to buy retail futures trading platform NinjaTrader for $1.5 billion.

(Reporting by Manya Saini in Bengaluru; Editing by Tasim Zahid)