Two major cryptocurrency companies, Ripple and FTX, told CNBC that they’re looking for acquisitions as the industry hopes to see growth through purchasing other firms.
This could be a sign that crypto firms feel they’re both large enough and well-capitalized to throw cash on acquisitions.
President of cryptocurrency exchange FTX U.S., Brett Harrison, said in an interview last week that the company is in “a very good spot in terms of our capital and cash, “ further adding, “look around the market for potential merger and acquisition opportunities.”
Harrison also said FTX U.S. is looking for companies that will help them acquire more users or regulatory licenses. Last year, FTX acquired the exchange Blockfolio which helped it get more users. This month, CNBC reported that FTX is looking for brokerage start-ups to acquire a further push into stocks.
In 2021, FTX U.S. bought LedgerX, a futures exchange platform that utilized several licenses from U.S. regulators.
Harrison said, “We’re doing that globally, in places like Japan, Australia, in Dubai, different places where we’ve been able to either partner with local companies or sometimes do acquisitions to be able to get licenses that we need.”
At the same time, Brad Garlinghouse, the CEO of the cross-border payment company Ripple, stated that the company has “a very strong balance sheet” and has predicted a rise in mergers and acquisitions in the crypto industry.
Garinghouse told CNBC last week while attending the World Economic Forum in Davos, Switzerland, “I think they’ll be an uptick in M&A in the blockchain and crypto space. We haven’t seen that yet. But I think that’s likely in the future. And I certainly think as that unfolds, we would consider things like that.
He later added, “We’re not at a stage of growth where I think we’re more likely to be the buyer versus the… seller.
In 2021, mergers and acquisition activity in crypto did very well with the global value of such transactions totaling more than $5.5 billion, as opposed to $1.1 billion in 2020, according to PWC. That directly correlated with a boom in cryptocurrency prices that took bitcoin to it’s all-time high in November last year.
Since then, prices have plummeted. Bitcoin currently has a 55% of its record high of $68, 990.90, according to CoinDesk data.
A dip in cryptocurrency prices and the potential valuations of companies in the industry, could make certain acquisitions attractive to larger contenders.