A new report has concluded that increased M&A activity this year could prove just how quickly the crypto industry has matured – and how rapidly mainstream companies are becoming infatuated with this fledgling business sector.
These were the findings of a review and outlook report from the Spartan Group, an Asia-based blockchain advisory firm established by three former Goldman Sachs staffers.
They made a number of predictions about the 2021 M&As market, including the following claims:
- The American crypto exchange giant Coinbase will “continue its spree of acquisitions leading to its initial public offering (IPO)” in Q1/Q2 2021, and the IPO will be a “catalyst” for further major listings (e.g., BlockFi, Digital Currency Group) in the wider industry and other regions.
- 2021 will see larger deal sizes and an entry of fintech firms (payments companies, digital wallets, apps etc.) among the most active buyers: "The entry of Fintech players will enhance competition between fintech companies and crypto exchanges to secure key infrastructure players and customers, which in turn will push valuation multiples in M&A transactions higher."
- Regulatory measures from the Financial Action Task Force (FATF) and others will lead crypto players to make compliance-related M&A deals: "Consequently, this will motivate transactions on two opposing fronts: 1) from buy-side firms looking to acquire regulated entities and 2) unregulated actors looking for potential exits for their shareholders via mergers or acquisitions."
- Crypto-only operators will attempt to “offer broader financial products,” a factor that could influence their M&A decision-making: crypto native platforms are expected to make targeted acquisitions of tokenization technologies to allow them to capture the value generated from offering a wider range of innovative products.