Kraken Acquires CFTC-Licensed Designated Contract Market Small Exchange

Cryptocurrency platform Kraken has acquired Small Exchange, a Commodity Futures Trading Commission-licensed designated contract market, from IG Group for $100 million.

This acquisition expands Kraken’s global trading infrastructure and supports it plans to launch a fully U.S.-native derivatives product suite, Kraken said in a Thursday (Oct. 16) press release.

Kraken Co-CEO Arjun Sethi said in the release that the acquisition “creates the foundation for a new generation of United States derivatives markets.”

“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,” Sethi said. “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.”

In its own Thursday announcement of the sale of Small Exchange, IG Group said that the deal includes IG entering into a partnership agreement with Kraken that includes distributing the new exchanges products.

“The transaction represents a significant return on the Group’s acquisition of Small Exchange and enables us to collaborate with Kraken on the distribution of new crypto products,” IG Group CEO Breon Corcoran said in the announcement.

Kraken acquired retail futures trading platform NinjaTrader in March for $1.5 billion, saying the deal would broaden Kraken’s reach beyond digital assets, allowing it to integrate into multiple asset classes and attract a larger user base.

In July, Kraken launched a U.S.-regulated derivatives offering called Kraken Derivatives US that is powered by NinjaTrader and enables U.S. clients to trade cryptocurrency futures alongside the company’s existing spot market offering.

When Kraken released its second-quarter financial highlights on July 30, it said in that report: “Kraken is in build mode. We are creating a multi-asset platform that enables anyone to trade anything, anytime, anywhere.”

Sethi said in the Thursday press release that Kraken now operates regulated derivatives venues in the U.S., the United Kingdom and the European Union, with a system that spans six fiat currencies and more than 450 digital and traditional assets.

“Together, these elements create a network that moves collateral in real time, nets exposure across jurisdictions and reduces capital inefficiencies that have long held back U.S. traders,” Sethi said.