The deal, announced on October 16, represents a major step in Kraken’s endeavors to build a full-fledged trading platform ahead of its planned public listing in 2026.
What the deal includes
The deal combines $32.5 million in cash and $67.5 million in stock from Payward, Kraken’s parent company. The Small Exchange holds a Designated Contract Market (DCM) license from the Commodity Futures Trading Commission (CFTC), which allows Kraken to create and list its own derivatives products under federal supervision.
A DCM license allows exchanges to offer futures and options contracts while meeting the same regulatory standards as major US exchanges such as the Chicago Mercantile Exchange. The CFTC requires DCMs to follow 23 fundamental principles, including preventing market manipulation and maintaining fair trading rules for all participants.
Source: blog.kraken.com
For IG Group, the British trading house that sold Small Exchange, the deal generated a profit of £73.3 million after tax. The two companies will continue to work together through a partnership agreement where IG can distribute products from Kraken’s new derivatives platform.
Building a global business network
The Small Exchange acquisition completes Kraken’s regulatory puzzle. The company now operates licensed derivatives venues in the US, UK and EU. This network handles more than 450 digital and traditional assets across six major currencies, all connected through a single technology platform.
“This move connects spot, futures and margin products within a single regulated liquidity system,” Kraken co-CEO Arjun Sethi said in the company’s announcement. The integrated system reduces delays in moving funds between different types of trades and offers features previously only available on offshore exchanges to US traders.
Before this deal, US traders who wanted to use Kraken for derivatives had to route their orders through other exchanges. Now Kraken can handle everything internally — from taking orders to filtering trades and managing risk — just like established Wall Street exchanges.
Part of larger expansion plans
The purchase of Small Exchange is a continuation of Kraken’s aggressive growth strategy. Earlier this year, the company purchased NinjaTrader for $1.5 billion, adding 2 million customers and access to futures contracts listed on the Chicago Mercantile Exchange. In September, Kraken became the first major cryptocurrency exchange to enter private trading through its acquisition of Breakout.
These moves have transformed Kraken from a simple cryptocurrency exchange into a multi-product financial platform. The company now offers tokenized shares to European clients, perpetual contracts to retail traders, and advanced trading tools that compete with traditional brokers.
Kraken’s financial performance supports this expansion. The exchange reported revenue of $412 million during the second quarter of 2025, up 18% from last year. Trading volume reached US$186.8 billion, while customer assets on the platform grew by 47% to reach US$43.2 billion.
Preparing for Wall Street
Kraken recently completed a $500 million funding round at a $15 billion valuation, and is reportedly seeking another $200-300 million that would value the company at $20 billion. Goldman Sachs and Morgan Stanley are advising on the planned IPO, which could happen as early as 2026.
The timing seems right for cryptocurrency companies to go public. President Trump’s administration has taken a friendlier approach to digital assets than in previous years. Several enforcement actions against cryptocurrency companies, including some involving Kraken, have been dropped or stayed while new regulations are developed.
Other cryptocurrency companies have successfully entered the public markets this year. Circle, the company behind the USDC stablecoin, went public in June at $31 per share in its IPO. Gemini, founded by the Winklevoss twins, completed its initial public offering in September, raising $425 million at a valuation of $3.3 billion. These successful debuts demonstrate strong investor appetite for regulated cryptocurrency infrastructure.
The competition is heating up
The cryptocurrency derivatives market has grown rapidly despite broader market challenges. Cryptocurrency derivatives trading totaled $20.2 trillion in Q2 2025, down just 4% compared to a 22% decline in spot trading volumes.
Kraken faces competition from other exchanges that are racing to capture this market. Coinbase operates its own derivatives platform internationally, while traditional finance giants like CME Group have expanded their offerings for cryptocurrency futures. The Small Exchange acquisition gives Kraken the organizational foundation to compete directly with these established players on their home turf.
Bottom line
Kraken’s $100 million purchase of Small Exchange represents more than just another acquisition. It completes the regulatory infrastructure needed for Kraken to operate as a full-service financial platform in the world’s largest capital market. With derivatives licenses secured across three major jurisdictions and an initial public offering on the horizon, Kraken has positioned itself to bridge the gap between cryptocurrencies and traditional finance at a time when these boundaries remain blurred.