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In brief Deutsche Börse has acquired a $200 million stake in Kraken’s parent company, valuing the crypto exchange at $13.3 billion.
The deal deepens a partnership spanning FX, custody, settlement, and tokenized assets.
An expert said the investment points to a wave of TradFi consolidation around crypto incumbents, with compliance increasingly becoming a competitive advantage.
Deutsche Börse AG’s $200 million bet on crypto exchange Kraken could change how traditional financial institutions stake their claim in digital assets, according to one expert.
The Frankfurt stock exchange operator has acquired a 1.5% fully diluted stake in Payward Inc., Kraken’s parent company, in a deal expected to close in the second quarter pending regulatory approval, according to a Bloomberg report.
Decrypt could not verify the claims at the time of publication and has reached out to both companies for comment.
The transaction values Kraken at roughly $13.3 billion, down from its $20 billion valuation during a November fundraising round, according to Bloomberg calculations.
“We’re seeing a clear wave of consolidation and partnerships as traditional financial institutions move to catch up with crypto, particularly around tokenized assets,” Ruchir Gupta, co-founder of Gyld Finance, told Decrypt.
“It’s hard for them to build out these businesses from scratch; therefore, they are investing in incumbents to gain an edge,” he added.
Deutsche Börse’s move follows that of Intercontinental Exchange, parent of the New York Stock Exchange, which invested roughly $200 million in crypto exchange OKX earlier this year in a deal valuing OKX at $25 billion.
“Large traditional players are under pressure to keep up with the momentum and regulatory clarity, and buying out stakes—especially in companies that are still private—is one of the easiest ways to do that,” Gupta told Decrypt.
“I see this as an important milestone for tokenized securities but also more broadly for the convergence of traditional markets and blockchain-based rails,” he said, adding that a Deutsche Börse endorsement opens doors for institutional clients who need that vote of confidence before engaging with a firm like Kraken.
The partnership
The investment builds on a partnership the two firms announced in December, spanning FX liquidity, custody, settlement, collateral management, and tokenized assets.
Under that agreement, Kraken integrated directly with 360T, a Deutsche Börse subsidiary and one of the world’s largest foreign-exchange trading venues, giving Kraken clients access to bank-grade FX liquidity.
In February, the partnership reached its first milestone as xStocks launched on 360X, Deutsche Börse’s regulated trading venue, enabling trading of blockchain-based tokens representing real equities and ETFs, each backed 1:1 by underlying assets and held with licensed custodians.
Public market push
Last November, Kraken confidentially filed for an IPO after raising $800 million at a $20 billion valuation, but the listing has since been put on hold, according to a CoinDesk report.
Meanwhile, KRAKacquisition Corp., a SPAC sponsored by a Kraken affiliate, completed a $345 million public offering in January and is hunting for an acquisition target valued as high as $10 billion.
“The market is clearly paying up for those and starting to realize there’s big changes afoot,” Ravi Tanuku, director at KRAKacquisition, told Decrypt last month, referencing investor appetite for firms tied to stablecoins and tokenization.
Extortion threat
Kraken is also contending with a recent extortion attempt in which attackers claimed access to some customer data, with Chief Security Officer Nick Percoco stating the company will not engage with them and is working with law enforcement across jurisdictions.
Around 2,000 individuals potentially had their information viewed, Percoco said, with anyone at risk already contacted.