Kraken is preparing for a big funding push before potentially going public. With digital assets booming, investors are excited, and changing regulations are starting to favor cryptocurrencies.
Kraken, established in San Francisco in 2011 and owned by Payward, is eyeing over $100 million in this pre-IPO round, according to sources familiar with the situation. The exchange has been contemplating an initial public offering (IPO) since at least 2021. The potential for this move comes as cryptocurrencies approach record highs and U.S. regulators begin to show a more favorable stance towards digital assets.
Kraken’s Strategy and Regulatory Challenges
Recently, Robinhood Markets announced its acquisition of Bitstamp Ltd., another crypto exchange, highlighting the increasing interest in the sector. Kraken's fundraising efforts are expected to conclude by the end of the year, aiming to bolster its resources as it prepares for a public offering.
Kraken has expressed its commitment to advancing the global adoption of cryptocurrency. In a statement, the company said, “We are always exploring strategic paths toward Kraken’s Mission: accelerating the global adoption of crypto. We remain fully focused on investing in this goal.”
The company is also looking for a prominent partner to join its board and help guide it through a successful IPO next year. However, discussions about terms and valuations remain informal, with no official agreements in place yet.
Kraken's path to an IPO hasn't been smooth. They've faced falling crypto prices and issues with the U.S. Securities and Exchange Commission (SEC). Last year, Kraken settled one case with the SEC, but they still have a legal dispute where the SEC claims Kraken was running an unregistered broker-dealer, clearing agency, and exchange. Kraken denies these charges.
The rules for cryptocurrencies are changing. In January, the SEC allowed exchange-traded funds (ETFs) to invest directly in Bitcoin, and in May, they moved to allow similar funds for Ether. Cryptocurrencies are also becoming a hot topic in politics, with presidential candidates showing support for the industry.
Kraken's Financial Future and Market Impact
Kraken is expected to generate between $1 billion and $2 billion in revenue this year, according to insiders. In comparison, Coinbase, which went public via a direct listing in 2021, is projected to bring in $5.9 billion in revenue.
Kraken's potential IPO is a significant step for the cryptocurrency market, reflecting the growing mainstream acceptance and investor interest in digital assets. As the company navigates these final stages before going public, it continues to play a pivotal role in the evolving landscape of global finance.
