- Exchange acquisitions are the easiest deals to make.
- The deal activity won’t be just in the US.
The crypto industry has never truly experienced a rampant deal-making phase, with larger firms historically preferring to scoop up tokens that are already on the market.
That’s changing, says Dan Tapiero, CEO and chief investment officer of 10T Holdings, a $1.4 billion fund that invests in digital-assets companies.
The industry’s $4.1 billion in deals so far — capped most recently by Robinhood Markets’ $200 million acquisition of Bitstamp — is just the beginning.
“We’ll see a lot more of that, and probably a lot more substantial; $200 million is a very low value,” Tapiero told DL News.
Tapiero said exchanges are the easiest deals for traditional firms.
“The traditional financial exchanges should be purchasing or merging with some of the larger, global exchanges,” he said. “There are at least 10 to 15 exchanges out there that are of decent quality.”
Tapiero said the industry is seeing renewed interest this year — evidenced by Robinhod’s splashy acquisition — thanks to the January approval of spot Bitcoin exchange-traded funds, which count Wall Street heavyweights BlackRock and Fidelity Investments as issuers.
“That’s really woken people up,” he said. “Up until six months ago, people were thinking this space was just going to disappear, then we had the ETF.”
Indeed, the last six months have already been dotted by smaller acquisitions in the industry.
In February, Tools for Humanity, the firm developing the controversial iris-scanning crypto project Worldcoin, acquired a wallet provider and team of engineers for an undisclosed amount.
In March, Marathon Digital, one of the industry’s largest Bitcoin mining outfits, said it acquired another Bitcoin mine in Texas, adding 200 megawatts in mining power.
“I’ve never been able to buy things at these low levels.”
— Dan Tapiero, CEO and CIO of 10T Holdings
Consensys CEO Joe Lubin told DL News in May that his blockchain firm was working on an acquisition in the crypto security sector.
In June, Polygon bought another zero-knowledge technology firm called Toposware.
Tapiero said 10T Holdings — which counts stablecoin issuer Circle and crypto exchange Kraken among its portfolio companies that are eyeing public listings — just closed a new fund and is going to invest now, too.
“I’ve never been able to buy things at these low levels,” he said.
“We’ve never had these kinds of deals, because the playing field was more crowded.”
Crypto’s three-year shakeout
The uptick in deal talk comes at a time when Bitcoin is hitting record highs but traditional investors are still wary of entering the crypto business because of its notorious volatility and sky-high valuations.
The past three years were no exception.
In 2021, Celsius Network hit a valuation of $3 billion and counted Caisse de Depot, Canada’s second-largest pension fund, as an investor. A year later, the crypto lender filed for bankruptcy.
Crypto exchange FTX, which was valued at $32 billion in January 2022, collapsed seven months later with a $8 billion hole in its balance sheet.
In March, FTX’s founder, Sam Bankman-Fried, was sentenced to 25 years in prison for fraud.
Liam Kelly is a Berlin-based DL News’ correspondent. Contact him at liam@dlnews.com.