Kraken Acquires Small Exchange for $100M to Expand U.S. Derivatives Offerings

Kraken has acquired Small Exchange, a CFTC-regulated derivatives trading platform owned by IG Group, in a deal valued at $100 million. This acquisition allows Kraken to establish a fully U.S.-native derivatives product suite and operate exchange-listed derivative markets under the oversight of the Commodity Futures Trading Commission (CFTC).

Small Exchange’s Designated Contract Market (DCM) license is a key component, enabling Kraken to design and operate regulated futures and margin markets in the United States. The purchase complements Kraken’s existing regulated operations in the United Kingdom and European Union, creating a consolidated platform that integrates spot, futures, and margin products within a single regulated liquidity environment.

Strategic Rationale Behind the Acquisition

Kraken’s acquisition of Small Exchange reflects a broader strategy to strengthen its regulated presence in the world’s largest capital market. The company structured the purchase using $32.5 million in cash and $67.5 million in equity from its parent company, Payward.

Arjun Sethi, co-CEO of Kraken, stated:

“Kraken’s acquisition of a CFTC-regulated Designated Contract Market creates the foundation for a new generation of United States derivatives markets. It is designed for scale, transparency, and efficiency. Under CFTC oversight, Kraken can integrate clearing, risk, and matching into one environment that meets the same standards as the largest exchanges in the world.”

This acquisition builds on Kraken’s previous moves to expand into U.S. derivatives, including its purchase of NinjaTrader, which enabled clients to trade CME-listed cryptocurrency futures alongside spot crypto. The addition of Small Exchange adds institutional-grade licensing and a domestic infrastructure layer to Kraken’s U.S. operations.

Small Exchange and Its Market Position

Small Exchange is a U.S.-regulated futures platform originally acquired by IG Group in 2023. The exchange offers small-sized contracts aimed at retail traders seeking access to U.S. futures markets. With the sale to Kraken, IG Group will continue as a distribution partner, allowing its clients to access products from the derivatives venue.

IG Group has refocused its crypto strategy toward the UK and Australian markets, obtaining a UK Financial Conduct Authority (FCA) cryptoasset license and acquiring the Australian exchange Independent Reserve for A$178 million. The sale of Small Exchange also generated £73.3 million post-tax gain for IG Group, strengthening its regulatory capital position.

Kraken’s Integrated Trading Vision

The acquisition aligns with Kraken’s goal of building a unified, high-performance trading environment for U.S. clients. By combining spot, futures, and margin products under one regulated framework, Kraken aims to reduce fragmentation, lower funding latency, and provide performance comparable to major global exchanges.

Key Features of Kraken’s U.S. Derivatives Expansion

• Regulated Infrastructure: Operates under a CFTC-regulated DCM license, ensuring compliance with U.S. derivatives regulations.
• Integrated Clearing and Risk Management: Combines clearing, risk, and matching functions within one platform.
• Multi-Asset Support: Supports crypto, equities, FX indices, and commodities such as oil and gold.
• Institutional-Grade Architecture: Connects domestic and international markets, reducing capital inefficiencies and netting exposures across jurisdictions.

Kraken’s co-CEO emphasized that the acquisition is not a marketing initiative but a technical and operational step to deliver better market structure to U.S. traders.

Implications for U.S. Traders

By acquiring Small Exchange, Kraken addresses several challenges in the U.S. derivatives market:

• Fragmented liquidity: Onshore markets often lack consolidated trading venues.
• Funding latency: Kraken’s integrated system reduces delays in collateral movement.
• Regulatory compliance: DCM licensing ensures adherence to CFTC standards.

The acquisition provides U.S. traders with a single platform for spot, futures, and margin trading, reducing the need to access multiple offshore venues for liquidity and product diversity.

Global Derivatives Footprint

Kraken now operates regulated derivatives venues in:

• United Kingdom via Crypto Facilities (acquired in 2019 under FCA regulation).
• European Union with MiFID II-compliant crypto futures markets.
• United States through Small Exchange (CFTC-regulated DCM) and NinjaTrader.

The combined infrastructure spans six fiat currencies and over 450 digital and traditional assets, offering a consolidated network capable of moving collateral in real time and managing exposure across jurisdictions.

U.S. Crypto Derivatives Market Growth

The U.S. crypto derivatives market has grown significantly over the past year. According to CME Group data, cryptocurrency's average daily volume increased 136% to 190,000 contracts in Q2 2025 compared with the same period last year.

Kraken’s acquisition enables the platform to capture institutional demand while addressing regulatory and operational challenges that have historically limited domestic derivatives activity. The integration of Small Exchange also complements Kraken’s recent offerings, allowing traders to access a broader range of contracts, including equities, FX indices, and commodities alongside digital assets.

Technical and Operational Integration

Small Exchange brings Kraken a Designated Contract Market license, permitting onshore derivatives trading under CFTC supervision. Kraken plans to integrate Small Exchange with its existing clearing and matching systems, offering:

• Consolidated margin and liquidity management across spot and derivatives.
• Reduced fragmentation compared to offshore trading venues.
• Real-time collateral movement and netting of exposures.

This integration aims to streamline trading for institutional and retail clients while ensuring compliance with U.S. futures regulations.

Historical Context of Kraken’s Derivatives Strategy

Kraken’s expansion into regulated derivatives is part of a multi-year investment strategy. Key milestones include:

• 2019: Acquisition of Crypto Facilities in the UK, launching FCA-regulated crypto futures.
• Early 2025: Launch of Europe’s largest regulated crypto futures platform under MiFID II.
• 2025: Acquisition of NinjaTrader for CME-listed futures in the U.S.
• 2025: Acquisition of Small Exchange, securing a CFTC-regulated DCM license.

As a result of these steps, Kraken aims to provide institutional-grade infrastructure for global digital asset markets while still adhering to multiple compliance jurisdictions.

Conclusion

Kraken’s acquisition of Small Exchange establishes a regulated infrastructure for U.S.-native derivatives markets, integrating spot, futures, and margin trading into one platform. The deal strengthens Kraken’s global derivatives footprint, provides institutional-grade access for U.S. clients, and addresses longstanding market inefficiencies such as fragmentation and capital inefficiency.

Rather than emphasizing speculative outcomes, the transaction highlights Kraken’s capability to deliver regulated, multi-asset trading infrastructure, supporting both institutional and retail clients across the U.S., EU, and UK.

Resources: 

1. Announcement: Kraken Acquires a CFTC-regulated Designated Contract Market, Expanding Derivatives Footprint in the U.S. Market: https://www.businesswire.com/news/home/20251015286360/en/Kraken-Acquires-a-CFTC-regulated-Designated-Contract-Market-Expanding-Derivatives-Footprint-in-the-U.S.-Market

2. Announcement: Kraken Completes Acquisition of NinjaTrader: https://www.businesswire.com/news/home/20250501627804/en/Kraken-Completes-Acquisition-of-NinjaTrader

3. Announcement: Announcing Europe’s largest regulated futures offering, strengthening our market-leading position in region: https://blog.kraken.com/news/euro-reg-futures

4. Announcement: Kraken Acquires Crypto Derivatives Trading Platform and Index Provider, Crypto Facilities, in Nine-figure Deal (Official Press Release): https://blog.kraken.com/news/kraken-acquires-crypto-derivatives-trading-platform-and-index-provider-crypto-facilities-in-nine-figure-deal-official-press-release