- Crypto.com's vigourous licensing campaign reveals expansion into equities.
- The acquisitions come at time when the industry is cash rich.
- The firm said it expects a response from the SEC over its lawsuit "soon."
As Bitcoin’s price hits new records, Crypto.com is tapping its bursting cash coffers to aggressively expand beyond its core market of digital coins.
A slew of new acquisitions reveals an energetic campaign to roll out trading for Tesla shares and gold for the crypto exchange’s 100 million users early next year.
That includes American users, plunging the exchange into an even more cutthroat market than crypto: fintech.
“We don’t shy away from competition,” Eric Anziani, Crypto.com’s president and chief operating officer, told DL News. “We will be very aggressive.”
Bitcoin highs
The crypto exchange’s shopping spree comes at a critical juncture for the industry.
January’s enthusiasm surrounding the launch of 10 spot Bitcoin exchange-traded funds, including one from the $11.5 trillion investment bank BlackRock, was a key validator.
Larger fintech players have since turned to crypto in one form or another.
Stripe, for example, acquired Bridge for $1.1 billion in October, while Revolut and Robinhood are expected to launch stablecoins next year. PayPal has already launched one.
That enthusiasm was compounded into a mania early this month on Donald Trump’s presidential victory in the United States. He campaigned for lower corporate taxes, fewer regulations, as well as making several audacious crypto-friendly promises.
He pledged to create a national Bitcoin stockpile and declared that all future Bitcoin would be mined in the US.
Bitcoin’s price has, in turn, soared higher than ever. Since President-Elect Trump swept election night, the $1.6 trillion cryptocurrency has risen 42%.
Despite that red-hot market for crypto, Anziani says the firm’s three acquisitions — and expansion to traditional stock trading — actually occurred without regard to the changing political climate in the US.
“We’re very happy that with the new administration, the tone has changed,” he told DL News. “But these acquisitions have been in the works for a long time.”
As crypto markets have risen over the year, so has Crypto.com’s balance sheet, said Anziani.
Given trading is one of its primary revenue streams — alongside fees generated from its Visa card program and yield-generating products — the rise in activity has been a boon for the crypto exchange.
Last month, for example, Crypto.com leapfrogged US crypto behemoth Coinbase in volume and became the second-largest exchange after Binance.
“We have a very strong business,” said Anziani. “We have a very strong balance sheet.”
Shopping spree
Starting on October 31, the firm revealed three key acquisitions in the US, Mauritius, and Australia. Anziani declined to comment on the cost of each business.
The thread linking them all together? Their trading licenses.
“For this expansion, which is lot more complex and would require a lot of time, we decided to do an acquisition to really accelerate the time to market,” he told DL News.
The Watchdog Capital acquisition will specifically let the nine-year-old Singapore firm legally offer equity trading to US users. Anziani said offering equities and options on equities was critical for the American market.
Crypto.com acquired Fintek, an Australian brokerage firm, and Charterprime, a brokerage firm in Mauritius, to offer similar trading services.
Sparring with the SEC
The US hasn’t been the friendliest market for Crypto.com, however.
The Securities and Exchange Commission alleged the crypto exchange violated securities laws in August. Crypto.com fired back with a countersuit, arguing the US regulator stepped beyond its statutory limits.
This unprecedented action by our company against a federal agency is a warranted response to the SEC’s regulation by enforcement regime which has hurt more than 50 million American crypto holders.
— Kris | Crypto.com (@kris) October 8, 2024
Anziani declined to comment on the status of the legal case. A Crypto.com representative said “we expect a response soon from the SEC based on federal civil procedure rules.”
“We’ve gone through the motion to get this acquisition approved through FINRA, and it’s an SEC-registered venue,” he told DL News. “We’re keen to get that started.” FINRA refers to the US Financial Industry Regulatory Authority.
Updated: This article was updated to clarify comments from Crypto.com.
Liam Kelly is DL News’ Berlin-based DeFi Correspondent. Got a tip? Email at liam@dlnews.com.