Cryptocurrency exchange Kraken has acquired Small Exchange from IG Group for $100 million, securing a coveted CFTC-licensed derivatives venue that positions the company to launch a fully U.S.-regulated futures and options platform. This is a strategic move that underscores the rapid maturation of crypto markets and growing institutional demand for onshore trading infrastructure.
The Oct. 16 acquisition provides Kraken with a Designated Contract Market (DCM) license, authorizing the exchange to design and operate exchange-listed derivatives under direct oversight of the Commodity Futures Trading Commission.
The deal comprises $32.5 million in cash and $67.5 million in Payward stock, Kraken's parent company, with IG Group also entering into a partnership agreement to distribute the new exchange's products.
Breaking Down Barriers Between Spot and Derivatives
The transaction marks a critical milestone in Kraken's multi-year strategy to build a vertically integrated trading ecosystem that bridges the gap between spot cryptocurrency markets and regulated derivatives venues. This infrastructure has historically existed offshore or remained fragmented across multiple platforms.
"Kraken's acquisition of a CFTC-regulated Designated Contract Market creates the foundation for a new generation of United States derivatives markets," Arjun Sethi, Kraken's co-CEO, said in a statement. "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."
Under CFTC oversight, Kraken can now integrate clearing, risk management, and order matching into one environment that meets the same standards as the world's largest derivatives exchanges. This capability could fundamentally alter how U.S. traders access crypto-linked instruments.
The Small Exchange DCM license enables Kraken to offer derivatives products to both retail and institutional clients, a significant expansion beyond the exchange's existing spot trading operations. The platform is designed to support contracts across cryptocurrencies and potentially traditional assets, creating opportunities for cross-asset strategies within a single regulated venue.
Building a Global Derivatives Network
The Small Exchange acquisition represents the latest addition to Kraken's expanding international derivatives footprint. The company has methodically assembled regulatory licenses and trading venues across major jurisdictions over the past several years.
In 2019, Kraken acquired Crypto Facilities, a U.K. Financial Conduct Authority-regulated Multilateral Trading Facility (MTF). Earlier in 2025, the company launched Europe's largest regulated crypto futures offering under the MiFID II framework, establishing a substantial presence in EU markets.
More recently, Kraken completed the $1.5 billion acquisition of NinjaTrader in March 2025. This deal provided U.S.-based clients access to CME-listed cryptocurrency futures alongside spot crypto trading in a unified interface. In July, Kraken expanded that offering to include a broader range of contracts covering equities, FX indices, and commodities such as oil and gold through its Kraken Derivatives US platform powered by NinjaTrader.
With operations now spanning the United Kingdom, European Union, and United States, Kraken operates what it describes as a unified trading architecture supporting six fiat currencies and more than 450 digital and traditional assets. The network design allows the company to move collateral in real time and net exposure across jurisdictions, reducing capital inefficiencies that have historically constrained cross-border derivatives trading.
Explosive Growth in Crypto Derivatives
Kraken's aggressive expansion into derivatives markets comes amid explosive growth in regulated crypto futures and options trading, driven primarily by surging institutional participation.
CME Group, the dominant U.S. derivatives marketplace, reported record-breaking cryptocurrency derivatives volume exceeding $900 billion in Q3 2025. The exchange's cryptocurrency average daily volume reached 340,300 contracts representing $14.1 billion in notional value during the quarter. This reflects an unprecedented level of activity and deepening institutional engagement.
According to CME's October 2025 Cryptocurrency Insights report, the exchange recorded 1,014 large open interest holders during the week of Sept. 16. This metric indicates a substantial broadening of the derivatives market beyond a select group of participants and demonstrates wider institutional presence.
The growth has been particularly pronounced in ethereum-linked products. CME's ether futures average daily volume surged 239% year-over-year in April 2025, reaching 14,000 contracts, while micro ether futures climbed 165% to 63,000 contracts. On Aug. 22, ether and micro ether futures set a daily volume record of 543,900 contracts worth $13.1 billion in notional value.
The market has also diversified beyond bitcoin and ethereum. CME launched the first CFTC-approved options on Solana and XRP futures on Oct. 13, 2025, with both assets achieving record open interest levels. Solana open interest surpassed $2.1 billion while XRP hit $1.4 billion, reflecting institutional appetite for exposure to alternative digital assets through regulated products.
To accommodate the 24/7 nature of cryptocurrency markets, CME announced plans to launch continuous trading for crypto futures and options beginning in early 2026. This move will eliminate the traditional "CME gap" phenomenon and align regulated derivatives trading with the always-on spot market.
Trump-Era Regulatory Clarity Accelerates Onshore Activity
Kraken's acquisition timing reflects a more crypto-friendly regulatory environment under President Donald Trump, who has positioned himself as supportive of digital asset innovation with promises of clearer rules and reduced enforcement uncertainty.
In January 2025, Trump signed Executive Order 14178, titled "Strengthening American Leadership in Digital Financial Technology." This order halted previous efforts to develop a central bank digital currency and signaled a more accommodative approach to private sector cryptocurrency innovation. The administration has encouraged digital asset firms to expand U.S. operations, creating conditions that make domestic licensing and infrastructure investments more attractive.
"By securing the necessary licensing and infrastructure today, Kraken is laying the groundwork for institutional-grade markets as crypto matures," the company stated, highlighting the strategic importance of establishing regulated venues during a period of policy clarity.
The shift has prompted traditional financial institutions to accelerate their cryptocurrency derivatives offerings. According to market analysts, adoption is likely to continue accelerating as more institutional and traditional financial players enter the digital asset space through regulated products.
"Digital asset firms are no longer content being sideshow players," Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors, told Reuters. "They aim to wrest seats in the core capital markets ecosystem."
Preparing for 2026 IPO
The Small Exchange acquisition comes as Kraken prepares for a planned 2026 initial public offering. The company recently closed a $500 million funding round that valued the exchange at $15 billion, with backing from investment managers, venture capitalists, and Kraken co-CEO Sethi through his Tribe Capital investment firm.
Founded in 2011, Kraken now serves more than 15 million users worldwide and supports trading across hundreds of digital and traditional assets. The exchange has recently experienced executive turnover with four senior leaders departing as the company streamlines operations ahead of its public market debut.
The acquisition of Small Exchange, combined with the earlier NinjaTrader purchase, positions Kraken as one of the few global cryptocurrency firms with derivatives venues spanning three major jurisdictions: the U.K., EU, and United States. This multi-jurisdictional infrastructure provides competitive advantages in serving institutional clients with global operations and complex cross-border trading requirements.
Partnership Creates Distribution Opportunities
For seller IG Group, the transaction represents what CEO Breon Corcoran described as "a significant return" on the company's investment in Small Exchange, which IG acquired from Crypto.com's parent company Foris DAX Markets in 2023.
The Small Exchange platform was designed to offer small-sized contracts aimed at retail traders seeking access to U.S. futures markets. This model complements Kraken's existing user base and could accelerate adoption of derivatives products among less sophisticated market participants.
Under the partnership agreement with Kraken, IG Group will collaborate on distributing new crypto products developed on the Small Exchange infrastructure, potentially creating revenue-sharing opportunities while allowing IG to maintain exposure to the growing derivatives market without direct operational responsibility.
Looking Ahead
As Kraken integrates Small Exchange into its global trading architecture, market participants will be watching closely to see how quickly the company can launch new products, attract institutional liquidity, and compete with established venues like CME Group and offshore platforms that currently dominate crypto derivatives trading.
The company emphasized that the acquisition represents "a larger build of global infrastructure" designed to reduce fragmentation, net exposure across jurisdictions, and eliminate capital inefficiencies. These ambitions, if realized, could reshape how digital assets are traded within regulated frameworks.
With crypto derivatives markets experiencing unprecedented institutional adoption and regulatory clarity improving under the Trump administration, Kraken's $100 million bet on Small Exchange positions the exchange to capture a substantial share of what appears to be one of the fastest-growing segments in modern finance.