Coinbase rival Kraken can go public via direct listing

Jesse Powell, CEO of Cryptocurrency Exchange Kraken, sits for a photo in the company’s San Francisco office in 2014.

David Paul Morris | Bloomberg via Getty Images

Cryptocurrency exchange Kraken is considering going public via direct listing in 2022 after seeing record trading volumes and new customers on a spike in Bitcoin price.

Kraken was founded in 2011 and is one of the world’s largest crypto exchanges. It has more than 6 million customers and is the fourth largest exchange by trading volume according to CoinMarketCap data.

Kraken’s CEO and co-founder, Jesse Powell, said in an interview that the company has benefited significantly from the Bitcoin rally. Bitcoin hit a record price of over $ 60,000 in mid-March. Traders attributed the move to institutional investors jumping into the market.

“Any volatility is good for us, but it’s always better when it’s on the way up,” Powell told CNBC. “The first quarter completely blew the whole of last year. We surpassed the previous year’s figures by the end of February. The entire market really just exploded.”

Kraken saw four times as many new users in the first quarter of this year as in the second half of 2020. Spot trading volume in the first quarter was 1.5 times higher than all of last year, reaching a record level of $ 160 billion .

Coinbase listing

Coinbase, Kraken’s main competitor in the US, posted record sales of $ 1.8 billion per quarter in the first quarter, more than all of 2020. The company is expected to go public next week in a blockbuster direct listing, the one It could be worth up to $ 100 billion.

Kraken is also weighing a stock market debut in 2022, Powell said.

“We want to go public sometime next year,” he said. “It would probably be a direct listing, similar to Coinbase.”

Direct listing, which lists companies without issuing new shares, has become a popular avenue for valuable tech companies looking to publicly offer an alternative to going public. IPOs have long been criticized by technology investors for mispricing stocks, which results in issuing companies sometimes leaving heaps of cash on the table.

Kraken is currently in talks with investors about a new round of funding that could reportedly be worth up to $ 20 billion.

“We were in some talks to do one more lap,” said Powell. “We delayed a bit to see where the Coinbase valuation hits. I suspect the price will pump a lot higher than before.”

“We are in no rush to raise capital,” he said, adding the company has a strong balance sheet. “The reason for this would only be to attract more strategic investors who can help us with geographic expansion and growth.”

NFT boom

According to Powell, the rise in NFTs, or non-fungible tokens, led to frenzied interest in alternative digital coins like ether. NFTs are a type of digital asset that represents ownership of unique collectibles, and they have become increasingly popular this year.

Ether, the digital currency on the Ethereum blockchain, hit a new all-time high of more than $ 2,100 on Tuesday, helping to push the market value of all cryptocurrencies above $ 2 trillion for the first time.

“Ethereum is a big part of it,” Powell said. “A lot of NFTs are built on Ethereum, a lot of these platforms work on Ethereum.”

Kraken’s boss added that people are also turning to other digital currencies like Flow and Filecoin as the fees for Ethertransactions rise due to the congestion on the Ethereum network. Ethereum is currently being ambitiously updated to make it faster and safer.

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