Cryptocurrency exchange Kraken is seeking more than $100 million ahead of a potential initial public offering (IPO), Bloomberg reported. The cryptocurrency exchange, founded in San Francisco in 2011, has long discussed going public. The move is said to be fueled by increased investor interest and a notable relaxation of regulations against digital assets.
Discussions with potential investors
According to informed sources, fundraising could be completed by the end of the year. Kraken aims to attract a special purpose acquisition company to ensure a successful IPO, possibly as soon as next year. Until now, discussions with potential investors have been informal, focusing on terms and valuations.
Kraken's journey toward an IPO was not without challenges. The exchange has faced a decline in cryptocurrency prices and conflicts with the US Securities and Exchange Commission (SEC). Kraken settled one case with the regulator last year, but continues to dispute allegations of operating as an unregistered securities broker, dealer and exchange.
In recent months, US regulators and politicians have shown a more positive stance towards cryptocurrencies. The Securities and Exchange Commission approved exchange-traded funds to invest directly in bitcoin in January and took steps toward approving similar funds for ethereum in May. Cryptocurrencies have also emerged as a political issue, with presidential candidates vying to appear crypto-friendly.
With the cryptocurrency market on the rise, Kraken is expected to generate revenue between $1 billion and $2 billion this year, according to insiders. By comparison, Coinbase, which went public via a direct listing in 2021, is expected to generate revenue of $5.9 billion.
Evaluation and financing talks
News about Kraken going public first emerged in 2021, when the exchange announced that it was considering a public listing in 2022 via a direct market listing. Initially, the exchange was planned through a traditional IPO or merger with a blank check takeover company.
Later, Kraken clarified that it was only considering a direct stock market listing because the company was too large for a SPAC merger. In a direct listing, the company goes public without issuing any additional shares.
Additionally, the company has engaged investors to raise new capital that will boost its valuation to more than $10 billion. Sources revealed a potential fundraising round with Fidelity, Tribe Capital and General Atlantic for an unknown amount, but none of them have officially confirmed the report.
This article was written by Jared Kirroy at www.financemagnates.com.
