How 2024 set up the latest crypto M&A deal

Digital asset prime broker FalconX bought trading firm Arbelos Markets

article-image

ArTDi101/Shutterstock modified by Blockworks

share


This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.


The latest crypto M&A deal makes more sense when considering the segment’s evolution in 2024. 

Digital asset prime broker FalconX bought trading firm Arbelos Markets in a bid to become one of the market’s largest crypto derivatives dealers.

FalconX, in a Thursday news release, noted the institutional market’s significant growth over the past year, “driven by positive regulatory momentum along with the growth of ETF and derivatives markets.”

The company added: “Similar to traditional asset classes, crypto derivatives will continue to scale to be many multiples of spot markets.” 

After bitcoin ETFs launched in January, the SEC approved options — contracts representing the right to buy or sell them at a certain price for a specific period of time — on the biggest of those products, BlackRock’s iShares Bitcoin Trust (IBIT). 

Industry watchers told me options would spur a more robust ecosystem around the spot ETFs, enhancing liquidity and price discovery. The tool essentially attracts institutional investors looking to better manage their bitcoin exposures as market conditions fluctuate.

Michael Klena, a partner at advisory firm Architect Partners, called this FalconX purchase “a logical progression in the market” as more demand and supply fosters more deals.

The institutional trading spurred by regulatory changes (ETF approvals) and expected crypto-friendly frameworks “means the larger firms are now able to move more aggressively to acquire and be confident not to get in the crosshairs of the regulators,” he said. On the supply side, there are a number of newer crypto derivatives firms (i.e. Arbelos, D2X and One Trading), but no one dominant player.

Another point: “Derivatives are a higher-margin product than spot trading, so firms will look to expand their offering as trading fees are compressed,” Klena said, noting the same thing happened in equity trading. 

We saw Cboe Global Markets close its acquisition of ErisX in 2022. Coinbase, that same year, bought derivatives exchange FairX.

“But timing was a bit early on those deals due to the not-yet-seen regulatory clarity,” Klena told me. “We are now hearing firms saying that timing is looking better.”

Alongside the advent of crypto ETFs and pending regulatory clarity, Arbelos Markets CEO Joshua Lim in a statement labeled growing acceptance of crypto as a diversifier in portfolios as yet another reason this is a “critical moment” for this combination to occur.

You may recall BlackRock’s recent guidance that a 1-2% allocation to BTC is “reasonable.”

We saw a flourish of crypto M&A deals right after the election. Klena anticipates more deals to come around derivatives trading and infrastructure.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Nillion_DeSci_Report_Template.png

Research

Nillion’s Monad Integration is poised to catalyze the next phase of DeSci’s evolution by eliminating key privacy bottlenecks. This synergy allows researchers, institutions, and DAOs to exchange sensitive data and insights securely while managing governance and payments onchain.

article-image

Celebrating the wisdom of a diamond-handed Bitcoin Legend

article-image

With the success of RWAs and stablecoins, DePINs could onboard the next wave of crypto users

article-image

Is crypto straying too far from things of value?

article-image

Firedancer and Solana ETFs look less significant than before

article-image

The newly passed House bill amplifies that strategic pivot for the Trump administration, from attempting austerity to running the economy hot

article-image

Unable to secure further funding, the game cycled through three different blockchains and at least five different game engines since 2018