To the bit – Crypto M&A runs apace

Data Insight Dealspeak 10 May

To the bit – Crypto M&A runs apace

Despite a general slowdown in M&A activity due to market uncertainty, EMEA’s burgeoning crypto scene is proving to be a safe haven for dealmakers.

Deals involving cryptocurrency and digital asset firms broke records last year. EMEA alone saw at least 43 deals in 2021 amounting to EUR 10.1bn in value, including a EUR 6.9bn SPAC merger between UK digital asset exchange Bullish and Far Peak Acquisition Corp [NYSE:FPAC], and JC Flowers’ EUR 253.8m minority investment in forex and crypto exchange LMAX, according to Dealogic data.

But 2022 seems on track to be another bumper year for crypto M&A. At least 16 EMEA transactions with an aggregate value of EUR 987.5m were announced in the first quarter, up from 10 deals worth EUR 626.9m in 1Q21, according to Dealogic. This compares to six transactions adding up to EUR 954.1m in 4Q21.

Into the mainstream

Once a fringe product, cryptocurrencies like bitcoin and Ethereum have become more and more commonplace, reaching a global value of circa USD 1.8trn, according to CoinMarketCap. Blockchain, the decentralised technology that underpins them, has also caught the attention of corporations around the world.

Financial institutions have shown growing interest in crypto and the digitisation of traditional securities like equities and bonds. Take Deutsche Boerse’s [ETR:DB1] majority acquisition last year of Crypto Finance and Robinhood’s [NASDAQ:HOOD] purchase of crypto platform Ziglu last month.

In some instances, though, crypto firms have been the ones to bridge the gap, such as BCB Group with its recent acquisition of German lender Sutor Bank.

Unsurprisingly, the crypto boom has brought along new rules and regulations, which can act as a double-edged sword: on the one hand, regulation may impact the business models of crypto natives; on the other, it may make institutions more comfortable with the space.

Notably, European lawmakers are proposing that crypto asset services be brought fully into the scope of anti-money-laundering (AML) rules. Brussels is also working on a Markets in Crypto-Assets (MiCA) Regulation as part of its digital finance strategy.

Keeping up

EMEA appears to be abound with opportunities to deploy capital, including an array of companies looking to raise cash. Scribestar, Luso Digital Assets and Arf are some of the European crypto and blockchain start-ups reported by this news service in the last couple months to be planning to tap investors.

This news service also revealed late last month that US crypto exchange Coinbase [NASDAQ:COIN] was in discussions to acquire Turkish rival BtcTurk, in a deal that could value the target in excess of USD 3bn – a little token of appreciation for EMEA’s homebred crypto talent.

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