Kraken has acquired the futures exchange Small Exchange from IG Group in a $100-million deal, laying the foundation to provide an entirely U.S.-based crypto derivatives suite.
This development comes during an increased overlap between mainstream finance and the digital asset space, with ever-growing institutions embracing regulated products like futures, options, and tokenized assets.
Key Takeaways
- Kraken acquired Small Exchange from IG Group for $100 million to expand its U.S. derivatives offerings.
- The acquisition provides Kraken with a CFTC-regulated futures exchange, enabling institutional-grade crypto products.
- Kraken is exploring a future move into prediction markets as regulatory clarity in the sector improves.
The Small Exchange is licensed by the Commodity Futures Trading Commission (CFTC) as a designated contract market. This gives Kraken an immediate entry into the regulated derivatives space.
Co-CEO Arjun Sethi said the deal will allow Kraken to integrate clearing, risk, and matching systems under one framework that aligns with global exchange standards. Industry analysts believe the acquisition strengthens Kraken's long-term position as institutional participation in digital assets accelerates.
"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.
The crypto group also confirmed it is considering launching a regulated prediction market.
Nevada warns operators on prediction market partnerships
However, not all regulators share the same view. The Nevada Gaming Control Board has cautioned operators that collaborating with companies offering prediction market contracts could jeopardize their licenses.
Chairman Mike Dreitzer issued an industry notice declaring that "sports event contracts are wagers," specifically referencing entities like KalshiEx, Crypto.com, and Robinhood.
The warning followed a recent court ruling against Crypto.com, which regulators said confirmed their stance that prediction markets function as a form of gambling. Kalshi, which is currently suing the board over a cease-and-desist order, maintains that its products fall under federal CFTC regulation.
However, Nevada's notice makes clear that only licensed sportsbooks can offer event-based contracts in the state. Regulators also noted that offerings on non-sporting events, including political elections, are prohibited.
Dreitzer stated that any Nevada licensee partnering with such markets risks disciplinary action and potential loss of suitability to maintain a gaming license.
