Hot on the heels of Coinbase’s prospective listing on the Nasdaq, U.S. cryptocurrency exchange Kraken is seeking to raise a new round of funding in a move that could see the firm valued at over US$10 billion.
According to Bloomberg, the San Francisco company founded in 2011, is in discussions with Fidelity, Tribe Capital and General Atlantic, and could see Kraken ultimately valued at over US$20 billion, depending on demand.
The timing could not be more opportune.
Even though the price of Bitcoin has pulled back somewhat, having hit US$58,000 before correcting sharply as U.S. Treasury yields spiked, interest in cryptocurrencies has never been higher.
Coinbase, which is set for a direct listing, and is the largest cryptocurrency exchange in the U.S. by volume, has been valued at almost US$100 billion, with revenue surging to US$1.3 billion last year and profits a record US$322 million.
Cryptocurrency exchanges have gained attention this year, as a wave of interest in Bitcoin and cryptocurrencies saw record volumes pouring into cryptocurrency exchanges and a surge in transaction fees.
And unlike other large cryptocurrency exchanges like Binance and Huobi, Coinbase and Kraken are two of a handful of U.S. cryptocurrency exchanges that are licensed and regulated and can accept U.S. customers.
Just two years ago, Kraken leaned on investment platform Bnk to the Future to raise US$13 million at a roughly US$4 billion valuation, and its latest raise could see its valuation more than double and potentially grow by as much as five times even.
Kraken also facilitates margin trading (trading cryptocurrencies through borrowing) and according to CoinMarketCap.com, is one of the largest U.S. cryptocurrency exchanges by spot trading volume.
Where Kraken’s value may lie though is in its Bitcoin futures, which puts it in the top ten cryptocurrency exchanges globally by volume.
As greater institutional and mainstream interest in cryptocurrencies grows, cryptocurrency exchanges and ancillary businesses will attract more investment interest – including for services such as blockchain analytics (for KYC and AML) and blockchain software services.
Growing interest in issuing a central bank digital currency also means that firms which provide expertise in blockchain analytics, could find their services tapped on by central banks globally.
A survey of central banks last year by the Bank of International Settlements saw 80% of central banks either considering launching their own central bank-issued digital currency, or seriously considering such issuance.