Now that cryptocurrency exchange Coinbase Global has filed to go public, all eyes are on which competitor will be next to the public equity markets. Put Kraken at the top of that list.
Kraken, a much smaller rival to Coinbase, is weighing a public listing, but a spokesman said any IPO probably wouldn’t come until 2022. If the company does choose to go public, it may use a direct listing.
“At this point no decision has been made and we’re fully focused on scaling our business, filling key roles and making sure we’re giving clients the best experience and products in a time of unprecedented growth,” the spokesman said in an emailed response to questions.
The comments squash reports that Kraken was considering merging with a blank-check special-purpose acquisition company, or SPAC. Earlier this month, Kraken CEO Jesse Powell told Bloomberg that SPACs were “beating down our door looking to do something with us.” Powell said it was unlikely the company would merge with a blank- check company given Kraken’s size relative to the SPACs.
Gemini, the cryptocurrency exchange from Cameron and Tyler Winklevoss, is also said to be considering going public. A spokesman declined to comment.
Founded in 2011, Kraken is a cryptocurrency exchange and one of the oldest Bitcoin exchanges in the world. Its customers can trade more than 50 digital assets and seven fiat currencies, including EUR, USD, CAD, GBP, JPY, CHF and AUD. More than 6 million traders, institutions and authorities use Kraken. The San Francisco company employs about 1,700 people.
Kraken, which refers to the mythical sea creature that terrorizes sailors, processed more than $116.4 billion in trading volume during January and February, 15% more than its entire volume in 2020, the spokesman said.
News of a possible Kraken IPO comes as Coinbase is going public. Coinbase, the largest U.S. cryptocurrency exchange with more than 43 million verified users last year, has filed to go public using a direct listing. It is expected to launch the offering in April. Coinbase stockholders have registered 114.85 million shares, according to a prospectus. No price has been set for the stock, although Coinbase shares have sold privately for between $200 and $375.01 during the first quarter, the filing said.
Interest in Coinbase, Kraken and Gemini rocketed after Bitcoin’s valuation jumped this year. Bitcoin traded above $60,000, a record high, earlier this month. In February, Tesla disclosed a $1.5 billion in Bitcoin in its annual report. Coinbase’s valuation hit nearly $68 billion in first quarter based on its weighted average share price of $343.58, the prospectus said. That’s up from $28.83 in third quarter, implying a $5.3 billion valuation during that period.
Kraken is also out fundraising in a round that values the exchange at $10 billion or possibly double that amount, Bloomberg said. CEO Powell has said the $10 billion was “a low valuation” and he wouldn’t be interested in selling shares at that price.
Kraken has raised $118.5 million, according to data from Crunchbase. Investors include Blockchain Capital, Digital Currency Group, Hummingbird Ventures and Tribe Capital. Kraken last collected $13.6 million in 2019 from more than 2,200 individual investors through a crowdfunding campaign. The 2019 round valued Kraken at more than $4 billion.
Kraken has received much inbound interest, said the spokesman, who didn’t comment specifically on the reported fundraising. “[Kraken] is well capitalized but we haven’t ruled out bringing in additional strategic partners,” he said.
Write to Luisa Beltran at [email protected]