tl;dr
Kraken's acquisition of Small Exchange for $100M marks a seismic shift in crypto derivatives, boosting regulatory compliance and global trading capabilities as the industry races to dominate futures markets.
**Kraken Expands Derivatives Footprint with $100M Acquisition of Small Exchange**
In a strategic move to solidify its position in the evolving crypto derivatives market, cryptocurrency exchange Kraken has acquired Small Exchange, a designated contract market maker (DCM), from IG Group for $100 million. The deal, announced on Thursday, marks a pivotal step in Kraken’s efforts to build a unified trading platform and enhance its offerings in the U.S. and global markets.
### A Boost for U.S. Derivatives Trading
Small Exchange, licensed by the U.S. Commodity Futures Trading Commission (CFTC), grants Kraken the regulatory framework to operate as a derivatives market maker. This acquisition enables Kraken to integrate clearing, risk management, and trade matching into a single, regulated environment, aligning its operations with the standards of the world’s largest exchanges.
Kraken co-CEO Arjun Sethi emphasized the significance of the move, stating, “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.” The DCM license allows Kraken to connect spot, futures, and margin trading products within a unified liquidity system, reducing fragmentation and accelerating trade execution.
### Expanding a Global Derivatives Network
The Small Exchange acquisition is part of Kraken’s broader strategy to develop a global derivatives infrastructure. The company has previously expanded its presence in the U.K. and European Union, including the 2019 acquisition of UK-based derivatives platform Crypto Facilities and the launch of EU-compliant derivatives trading in May 2025 under the Markets in Financial Instruments Directive (MiFID II).
Sethi highlighted that the combined platforms create a network capable of moving collateral in real time, netting exposure across jurisdictions, and reducing capital inefficiencies for U.S. traders. “This network addresses long-standing challenges in the market, positioning Kraken to lead the next generation of derivatives trading,” he added.
### Building on Prior Acquisitions
Kraken’s foray into derivatives is not new. In July 2025, the exchange acquired NinjaTrader, a futures trading platform, for $1.5 billion, enabling it to offer Chicago Mercantile Exchange (CME)-listed crypto futures alongside spot trading. This move was followed by the launch of EU derivatives trading in May 2025, further cementing Kraken’s global footprint.
### The Rising Tide of Crypto Derivatives
Kraken’s expansion comes as the derivatives market continues to outperform spot trading. While spot trading volumes declined by 22% in Q2 2025, derivatives remained resilient, with total trading volumes reaching $20.2 trillion. Mark Jennings, head of Europe at Gemini, predicts the global derivatives market will surge to $23 trillion by year-end.
Major players are racing to capitalize on this trend. In October 2025, CME Group announced plans to introduce “always-on” crypto derivatives trading in 2026, while Coinbase, the largest U.S. crypto exchange by volume, acquired Deribit in May 2025 to bolster its derivatives offerings.
### Conclusion
Kraken’s acquisition of Small Exchange underscores the growing importance of derivatives in the crypto ecosystem. By combining regulatory compliance, technological innovation, and strategic acquisitions, Kraken is positioning itself as a key player in shaping the future of global derivatives trading. As the market evolves, the competition to dominate this space is intensifying, with implications for traders, regulators, and the broader financial landscape.