- •Kraken buys CFTC-licensed Small Exchange to build a regulated U.S. derivatives hub.
- •The $100M deal includes cash and equity from Payward and a contract distribution pact.
- •IG Group exits the venue with profit and changes focus to UK and Australian markets.
Kraken has deepened its regulated U.S. derivatives presence by purchasing Small Exchange, a Designated Contract Market licensed by the Commodity Futures Trading Commission. The $100 million deal, completed this week in the United States, allows the platform to operate exchange-listed derivatives under direct CFTC oversight. The acquisition involved both cash and equity from Kraken’s parent firm Payward and positions the company to consolidate spot, margin, and futures products under one regulated system.
Licensing and Deal Structure
Small Exchange was acquired from IG Group through a transaction split into $32.5 million in cash and $67.5 million in equity. The deal includes a distribution agreement that enables IG Group to continue listing contracts from the venue.
IG Group also recorded a post-tax gain of £73.3 million from the divestment and said it would redirect its crypto strategy to markets such as the United Kingdom and Australia. Its CEO Breon Corcoran described the proceeds as a return on investment and noted ongoing collaboration with Kraken for product access.
Kraken co-CEO Arjun Sethi said the acquisition lays a framework for integrating risk management, matching and clearing in one regulated venue. He emphasized that CFTC oversight enables domestic development of derivatives and reduces the reliance on offshore structures that previously served U.S. traders. The license would allow the firm to design new derivatives products, list contracts directly and align operations with standards applied to larger traditional exchanges.
Expansion of Existing Infrastructure
This builds on a sequence of recent acquisitions. Earlier this year, Kraken purchased NinjaTrader, a U.S. futures trading platform that offers access to CME-listed crypto contracts. That deal enabled traders to engage with crypto futures through a unified interface that also supports spot trading. In addition, the company previously acquired Crypto Facilities in the United Kingdom in 2019, which operates as a Multilateral Trading Facility under the Financial Conduct Authority.
Operations now span the European Union through a regulated offering developed under MiFID II. Kraken has venues in three jurisdictions with derivatives licenses. Its infrastructure connects six fiat currencies and more than 450 assets across both traditional and digital markets. The firm says this framework supports moving collateral in real time across borders and managing exposure more efficiently.
According to data from CME Group, crypto derivatives trading in the United States has grown notably, with average daily volumes rising 136% in the second quarter compared to last year. The acquisition gives Kraken a direct foothold in that environment and allows the company to build a domestic suite that accommodates both institutional and retail clients.
Market Direction and Regulatory Context
The sale by IG Group is a change in its focus to overseas markets where it has been expanding regulatory approvals. The firm secured a cryptoasset license from the UK Financial Conduct Authority in September and moved to acquire Australian exchange Independent Reserve for A$178 million. IG also took part in a funding round at Zero Hash Holdings, a market infrastructure firm valued at $1 billion, securing an 8.1% shareholding.
Kraken structured the Small Exchange purchase to retain liquidity and expand regulatory reach. The acquisition is one of the few instances of a crypto platform holding derivatives licenses in the United States, the European Union and the United Kingdom. This combination supports a bid to create a unified U.S.-based derivatives environment that can operate under domestic supervision.
The company said the platform is aimed at meeting the same standards as major exchanges. It plans to use the new license to reduce fragmentation in the derivatives market by offering onshore access rather than relying on offshore venues. The move comes as the U.S. market sees renewed activity from digital asset firms pursuing regulatory clarity in the country.
Kraken’s leadership said the deal centers on market structure rather than branding. Arjun Sethi noted that integrating services under one regime lowers funding latency and improves connection across asset types. The company expects the licensed venue to support new contracts ranging from commodities, equities, foreign exchange indices and crypto.
The transaction extends an expansion effort that began several years ago. According to statements issued with the deal, the exchange intends to use the license to launch additional U.S.-based products without depending on intermediaries. The venue’s existing contracts target smaller-sized products historically aimed at retail traders, though new institutional offerings are expected as infrastructure is built out.
In its final stage, the acquisition brings together earlier developments, including NinjaTrader and the UK-based operations and places them under a broader regulated framework controlled by the CFTC in the United States.