Crypto trading platform Kraken has announced in a blog post that it has acquired Small Exchange, a CFTC-licensed Designated Contract Market from IG Group.
The deal signals Kraken’s determination to push further into the US market, strengthening its presence in derivatives, but possibly exploring the opportunity to start offering alternative options, such as sporting event contracts.
CFTC-licensed companies such as Kalshi and Robinhood have already been pushing aggressively into the market.
Kraken expands clout in the US with new acquisition
Kraken is buying the platform through different funding options, offering $32.5m in cash and $67.5m in Payward’s stock – the company’s parent company. Officially, the company has made no mention of sporting event trading and has focused on highlighting the immediate benefits of spot, futures, and margin products.
Kraken co-CEO Arjun Sethi had this to say, commenting on this development: "Kraken’s acquisition of a CFTC-regulated Designated Contract Market creates the foundation for a new generation of United States derivatives markets. It is designed for scale, transparency, and efficiency".
More importantly for Kraken, it expands its reach in derivatives and allows it to operate regulated venues across the United Kingdom, the European Union, and the United States, with its system featuring six fiat currencies and more than 450 digital and traditional assets.
This is not the first play Kraken has made for the United States, either, with the company also securing NinjaTrade, a US futures platform, empowering clients to trade CME-listed cryptocurrency futures, and more.
Focus squarely on derivatives, no mention of event contracts
Kraken has been ramping up its efforts steadily, building an ecosystem of digital assets that caters to all investor interests while ensuring that its products meet rigorous regulatory standards. Acquisition of already regulated companies has been an integral part of Kraken’s strategy.
As to whether Kraken would explore the prediction market space, this remains subject to speculation. Kalshi, another derivatives platform, has used "event contracts" to spearhead in the space, but where the two differ is that Kraken has so far been fixated on more traditional finance assets, whereas Kalshi has been exploring event contracts from the very start.
