A significant development for traditional financial institutions’ involvement in digital assets has been highlighted by Deutsche Börse AG’s acquisition of a 1.5% fully diluted stake in Payward Inc., the parent company of crypto exchange Kraken, for $200 million. This deal is anticipated to finalize in the second quarter, contingent on regulatory approval, as reported by Bloomberg.
Decrypt has sought comments from both companies involved but was unable to confirm these claims at publication time. According to Bloomberg’s calculations, this transaction values Kraken at approximately $13.3 billion, a decrease from its prior valuation of $20 billion in November during a fundraising round.
“Traditional financial institutions are increasingly forming partnerships and consolidations to keep pace with the crypto sector, particularly concerning tokenized assets,” stated Ruchir Gupta, co-founder of Gyld Finance, speaking with Decrypt. “Rather than building these businesses from scratch, they are opting to invest in existing players to gain a competitive edge.”
This move by Deutsche Börse is not isolated; it follows the Intercontinental Exchange, NYSE’s parent company, which invested around $200 million in crypto exchange OKX earlier this year, valuing it at $25 billion.
“Traditional large entities feel pressured by ongoing momentum and the need for regulatory clarity. Acquiring stakes, especially in private firms, is a straightforward strategy to meet these demands,” Gupta explained further. He views this as a pivotal moment for tokenized securities and the broader integration of traditional markets with blockchain technology.
Deutsche Börse’s endorsement could pave the way for institutional clients by providing a vote of confidence necessary before engaging with companies like Kraken.
This investment builds upon a December partnership between the two firms, covering areas such as FX liquidity, custody, settlement, and collateral management. As part of this collaboration, Kraken integrated with 360T, a Deutsche Börse subsidiary and one of the largest foreign-exchange trading venues globally, granting clients access to bank-grade FX liquidity.
In February, this partnership reached its first milestone when xStocks launched on 360X, Deutsche Börse’s regulated trading venue. This enabled the trading of blockchain-based tokens representing real equities and ETFs, each backed 1:1 by underlying assets held with licensed custodians.
Kraken had confidentially filed for an IPO in November after raising $800 million at a $20 billion valuation but has since put the listing on hold, as reported by CoinDesk. Concurrently, KRAK Acquisition Corp., sponsored by a Kraken affiliate, completed a $345 million public offering in January and is seeking acquisition targets valued up to $10 billion.
“The market’s increasing investments reflect significant changes underway,” said Ravi Tanuku, director at KRAK Acquisition, speaking with Decrypt. He referenced the growing investor interest in companies associated with stablecoins and tokenization.
Kraken also faces challenges from a recent extortion attempt where attackers claimed access to some customer data. Kraken’s Chief Security Officer, Nick Percoco, has stated that the company will not engage with the perpetrators and is collaborating with law enforcement across jurisdictions. He confirmed that around 2,000 individuals potentially had their information viewed, and anyone at risk was contacted.