Kraken acquires Small Exchange to launch US-regulated derivatives platform

Cryptocurrency platform Kraken has completed its $100 million acquisition of Small Exchange, a Commodity Futures Trading Commission (CFTC)-licensed Designated Contract Market (DCM), from IG Group.

The move signals the cryptocurrency exchange’s intent to establish a fully US-regulated derivatives business and explore opportunities in prediction markets.

The acquisition allows Kraken to operate under federal oversight, offering spot, futures, and margin products in one platform. It also positions the company to integrate clearing, risk management, and trade matching within a unified system.

“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,” said Arjun Sethi, Kraken’s Co-Chief Executive.

“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 added.

Kraken said the acquisition is part of its effort to build global trading infrastructure across multiple regions. The exchange now operates regulated derivatives venues in the United Kingdom, the European Union, and the United States, covering six fiat currencies and more than 450 digital and traditional assets.

A spokesperson told COMPLETE iGAMING  that Kraken is exploring participation in the US prediction market space—a sector that has drawn increasing attention from financial and gaming regulators.

Competitors have also moved toward federally regulated prediction markets. Kalshi, for instance, expanded into sports event contracts this year, facing disputes with state regulators in Nevada, New Jersey, and Massachusetts over whether event contracts constitute wagering.

The Nevada Gaming Control Board issued a clarification last week stating that it views sports event contracts as forms of wagering, even when listed on federally supervised exchanges such as those overseen by the CFTC.

The Small Exchange deal follows a string of derivatives-related acquisitions by Kraken. Earlier this year, the company acquired NinjaTrader, allowing US clients to trade CME-listed cryptocurrency futures alongside spot products through one interface. The offering has since expanded to include contracts tied to equities, FX indices, and commodities such as oil and gold.

Kraken has also been active in overseas markets. In 2019, it purchased Crypto Facilities, a UK Financial Conduct Authority-regulated Multilateral Trading Facility, and later launched what it described as Europe’s largest regulated crypto futures market under the MiFID II framework.

Sethi said the company’s latest acquisition supports its long-term plan to connect institutional-grade infrastructure across jurisdictions. “Together, these elements create a network that moves collateral in real time, nets exposure across jurisdictions, and reduces capital inefficiencies that have long held back US traders,” he said. “This is not about marketing or narrative. It is about building better market structure.”