KRAKEN, one the oldest cryptocurrency exchanges, is considering raising a final funding round ahead of a possible initial public offering (IPO) after receiving inquiries from potential investors during the current digital-asset market rally, according to sources familiar with the matter.
The exchange would likely seek to raise more than US$100 million, one of the sources said. With cryptocurrencies on the verge of all-time highs again and a perceived shift in a US regulatory pushback against digital assets, companies in the sector are receiving renewed interest from investors and reviving talks of going public. Robinhood Markets said on Thursday (Jun 6) it will acquire the crypto exchange Bitstamp. Kraken has talked about doing an IPO since at least 2021.
Kraken would likely raise the money in a so-called pre-IPO round, two of the sources said, who asked for anonymity because the discussions have not been made public. The fundraising may be completed by year-end, according to one of the sources. Kraken, whose parent company is Payward, was founded in San Francisco in 2011.
“We are always exploring strategic paths towards Kraken’s Mission: accelerating the global adoption of crypto,” Kraken said while declining to comment specifically on fundraising or an IPO. “We remain fully focused on investing in this goal.”
Kraken is looking for a “marquee” company to join its board and to help it have a successful IPO as soon as next year, said the sources. So far, the talks have only involved verbal exchanges of terms and valuations, not formal documentation, one of the sources said.
While Kraken has talked about going public for several years, it has been thwarted by the previous downturn in crypto prices, as well as butting heads with the US Securities and Exchange Commission (SEC). Kraken settled one case with the SEC last year, but is still going through the courts on another, in which the agency accused Kraken of operating an unregistered securities broker dealer, clearing agency and exchange – charges similar to those it filed against Coinbase Global, the largest US crypto exchange. Kraken has disputed the allegations.
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In recent months, US regulators and politicians have appeared to view crypto more favourably. In January, the SEC approved exchange-traded funds investing directly into Bitcoin, and in May made a step towards approving similar funds investing into Ether. Crypto has also become more of a political issue, with even presidential candidates jockeying to be seen as crypto-friendly.
With crypto prices rallying, Kraken is expected to have US$1 billion to US$2 billion in revenue this year, the sources said. Coinbase, which went public through a direct listing in 2021, is forecast to have revenue of US$5.9 billion, according to analysts’ estimates compiled by Bloomberg. BLOOMBERG
