Kraken’s $100M Small Exchange buy brings U.S. derivatives onshore

The onshore stack finally snaps into place Two years ago it was a talking point. Today it is a timetable. On October 16, 2025, Kraken signed a 100 million dollar agreement to buy the CFTC-licensed Small Exchange from IG Group, a move that gives the company a U.S. Designated Contract Market under federal oversight and a direct path to list regulated crypto futures and options in the United States. The signal is clear: a fully onshore derivatives stack is no longer theoretical, it is being assembled piece by piece. Reuters reported the deal details. For earlier context on U.S. onshoring trends, see our take on Kraken and Polymarket onshore deals. Why does this matter? Because market structure is destiny. For a decade, U.S. crypto traders familiar with regulated equities and futures had to step offshore to access deep derivatives markets. That divided liquidity, split pricing, and forced sophisticated firms to solve for compliance and operational risk before they could even think about strategy. Plug a regulated exchange into a regulated brokerage with real clearing pipes and you get a very different map of the market. Why this deal is different The Small Exchange is a CFTC Designated Contract Market. That means it can list exchange-traded futures and options for U.S. customers, subject to surveillance, rulebooks, position limits, and all the familiar protections of the Commodity Exchange Act. Historically, the Small Exchange has cleared its contracts through the Options Clearing Corporation, which is a well known derivatives clearing house. That matters for practical reasons. Many institutional players already have relationships and workflows that recognize the Options Clearing Corporation, which lowers the friction to try new listings. Kraken’s goal is to connect what has been separate until now: a crypto spot venue, a regulated U.S. derivatives exchange, and a front end that professional traders already know how to use. That last piece matters as much as the license. The NinjaTrader spine Earlier this year, Kraken announced a 1.5 billion dollar agreement to acquire NinjaTrader, a long standing U.S. futures platform and Futures Commission Merchant. In plain language, a Futures Commission Merchant is the registered brokerage that opens your futures account, collects margin, and connects you to clearing. NinjaTrader gives Kraken distribution to millions of futures users, compliance muscle, and the routing to move orders into U.S. derivatives markets. It also lets Kraken integrate spot and futures workflows for customers who want to view risk in one place. Kraken’s press release summarized the strategy. Put the parts together and you get a picture that looks like this: The exchange: Small Exchange, the listing venue under Commodity Futures Trading Commission oversight The broker and clearing access: NinjaTrader and any partner Futures Commission Merchants that connect to the listed products The spot venue: Kraken’s existing crypto markets, a source of collateral and a home for basis strategies When the exchange lists a new contract, the broker onboards customers under futures rules, the clearing house manages counterparty risk, and the spot venue supplies liquidity and reference prices. This is how traditional commodity markets work. The difference is that the underlying here is digital, the indices will often come from crypto native providers, and collateral can move in near real time. What products likely arrive first You can guess the product roadmap by looking at three constraints: what institutions already trade, what the Commodity Futures Trading Commission has seen before, and what can scale quickly without redesigning clearing. 1) Bitcoin and Ether options on cash-settled futures What it is: listed options whose underlying is a cash-settled bitcoin or ether futures contract. Premiums and settlement are in dollars, not in tokens. Why it is first: risk models, margin, and position limits for these structures are well understood by clearing houses. Market makers already quote them on overseas venues and on Chicago Mercantile Exchange linked products. That means you have an immediate seed of liquidity providers. Who benefits: registered investment advisers seeking defined risk strategies, funds that want convexity without custody complexity, and miners who want to collar revenue in a regulated envelope. 2) Cash-settled basis and calendar spread tools What it is: simple spread instruments that let a trader buy spot and sell futures, or express the curve between two futures expiries, in a single order. Think of it as turning a two leg strategy into one ticket with net margining inside the clearing house. Why it is next: the demand is constant, because the basis is what links spot and futures markets. If basis trades are easy, arbitrageurs enforce the relationship that keeps prices tight. Tight prices compress offshore funding edges and pull order flow into the regulated venue. 3) Index-referenced perpetuals, if the rulebook allows it What it is: a perpetual futures contract that references a robust index and has no fixed expiry, maintained by periodic funding payments. Overseas venues have built their entire crypto derivatives businesses on these contracts. Why it is conditional: a perpetual is unusual in U.S. listed markets. A Designated Contract Market can self-certify a product if it meets the Commodity Futures Trading Commission’s requirements, and the Commission can stay or object. If perpetuals appear in the United States, expect conservative funding mechanics, circuit breakers, and margin floors. If they do not, expect shorter-dated quarterly and monthly futures with liquid roll markets to fill that role. Who this unlocks first Registered investment advisers: most advisers are wired to trade at regulated exchanges through custodians and Futures Commission Merchants. Dollar-settled futures and options remove custody concerns and create structures that compliance teams know how to review. Expect model portfolios that allocate a low single digit percentage to options overlays, especially around bitcoin and ether. Multi-strategy hedge funds and proprietary trading firms: a regulated venue with familiar clearing lets funds deploy basis and volatility strategies at larger size, with less operational headache. If cross-margining between related futures and options is offered, capital turns faster and strategies scale. Bitcoin miners: a miner wants to lock in revenue when difficulty spikes or halving cuts block rewards. With liquid listed futures and collars, a miner can fix a floor on future production, hedge energy price shocks with commodity overlays, and finance equipment purchases against hedged cash flows. Fintech and corporate treasuries: some treasuries hold crypto as a strategic asset or need to manage payment flows. Dollar-settled futures and options allow them to hedge exposure without moving assets on chain, and to do so in accounts that already sit inside corporate risk systems. Product teams at exchanges and brokers: design for cross-margin inside the regulated silo first. Offer smart order types for basis and spread trades. Publish clear documentation about how collateral moves between spot and futures and exactly how intraday margin calls work. The bigger picture This is not just another exchange changing hands. It is a rewiring of how crypto markets in the United States will trade in the next cycle. In previous cycles, liquidity formed offshore first, then U.S. venues caught up. With a U.S. Designated Contract Market, a Futures Commission Merchant distribution channel, and a global spot footprint under one roof, the flow can start onshore and extend outward. If that happens, the U.S. will set more of the rules of the road for market integrity and for how new products get listed. There are still open questions. Will the Commodity Futures Trading Commission allow a perpetual design that fits U.S. risk standards, or will quarterly and monthly futures continue to do most of the work. Will clearing members provide generous enough limits in the early months to attract true market depth. Will cross-margining within the futures and options family roll out quickly enough to make the venue capital efficient for professional flow. Each answer tilts the path a little, but the direction of travel is already visible. The takeaway The pieces are on the table. A licensed U.S. exchange, a futures broker with reach, and a spot venue that already commands deep crypto liquidity are being combined into a single stack. That stack is built to move collateral faster, to list products U.S. institutions can hold, and to give price discovery a home that compliance teams can sign off on. The offshore era is not over, but the center of gravity is shifting. If you participate in this market, now is the time to align your systems, your policies, and your playbooks with a world where the United States is once again where the largest part of the book gets done.