Cryptocurrency exchanges are making major inroads into the US derivatives market as demand from retail customers expands.

In January, derivatives market volume reached nearly $3 trillion. This represented nearly 60% of the total crypto volume, surpassing all others. negotiation for the first time.

Spot volumes dropped 30% to $1.81 trillion, driven by the market slump.

The derivatives market now represents 61.3% of the total cryptocurrency market – CryptoCompare.

According to CryptoCompare, the increase in derivatives activity can be attributed to an increase in hedging and speculation.

January saw 1,882 BTC option contracts traded on the CME, up 28.6% from the previous month. This is the highest amount of BTC options traded since December 2020, when 3,749 options were traded.

BTC futures contract volumes rose 23.9% in January to 181,400. However, it pulls back compared to a 59.4% increase in ETH futures contracts (116,200 ETH) over the same period.

The big bags are snapping up the smaller ones

Cryptocurrency exchanges are increasing activity in the highly regulated US market, acquiring smaller exchanges that already have licenses.

Last month, Coinbase announced plans to buy Chicago-based FairX. The plan is to use the latter’s infrastructure to bring more consumer customers to the derivatives market. FairX is a small derivatives exchange regulated by the Commodity Futures Trading Commission, based in Chicago.

Late last year, Singapore-based Crypto.com spent $216 million on two assets owned by the UK’s IG Group and licensed in the US.

Additionally, Sam Bankman-Fried’s FTX has added the American derivatives platform LedgerX to its list. Bankman-Fried is a frequent advocate for greater regulation of cryptocurrencies, a stance that sets him apart from many of his competitors.

Major cryptocurrency exchanges are buying CFTC-regulated platforms as a bridge to offer derivative products to retail customers.

“In the US, cryptocurrency exchanges cannot offer leverage on spot cryptocurrencies without being a regulated futures commission trader,” Rosario Ingargiola, CEO of cryptocurrency settlement firm Bosonic told FT.com.

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Late last year, exchange BitMEX was fined $100 million after allegedly operating a cryptocurrency trading platform in the US without regulatory permission. The trial of four of the exchange’s co-founders on money laundering charges is expected to begin next month.

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