Cryptocurrency exchange Coinbase has entered into an agreement to acquire Deribit, a crypto options and futures exchange for around $2.9 billion.

The deal comprises $700 million in cash and 11 million shares of Coinbase Class A common stock, subject to customary purchase price adjustments.

Coinbase said the acquisition will enhance its derivatives business and provide traders access to spot, futures and options trading.

The takeover, which is subject to regulatory approval, is expected to close by the end of the year.

Deribit facilitated over $1 trillion in trading volume last year, with strong demand from institutional and advanced traders. Coinbase said it believes that the market for crypto options will grow in the same way as the options boom seen in the 1990s, adding that the acquisition will enable the firm to take advantage of this growth.

Coinbase predicts that Deribit will immediately enhance the company’s profitability as well as adding diversity and durability to its trading revenues upon close.

Coinbase said that options trading revenues are typically less cyclical than spot trading, as traders utilise options to manage risk during both rising and falling markets, adding that Deribit has a consistent track record of generating positive Adjusted EBITDA which the company believes will grow.

“We’re excited to join forces with Coinbase to power a new era in global crypto derivatives,” said Deribit chief executive Luuk Strijers. “As the leading crypto options platform, we’ve built a strong, profitable business, and this acquisition will accelerate the foundation we laid while providing traders with even more opportunities across spot, futures, perpetuals, and options – all under one trusted brand.”

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