Cryptocurrency exchange Kraken is reportedly in the process of raising over $100 million in anticipation of a potential initial public offering (IPO), according to Bloomberg.
Established in 2011 in San Francisco, Kraken has been contemplating a public listing for some time, spurred now by heightened investor interest and more lenient regulatory views on digital assets.
Kraken is engaging in discussions aimed at securing a special-purpose acquisition company (SPAC) partnership to facilitate a successful IPO, possibly within the next year.
Although these conversations with potential investors have been informal, they have focused on establishing terms and setting valuations.
The fundraising effort is expected to wrap up by the year’s end.
The road to an IPO has been rocky for Kraken, challenged by fluctuations in cryptocurrency prices and ongoing disputes with the U.S. Securities and Exchange Commission (SEC).
The exchange settled a case with the SEC last year but still faces accusations of operating as an unregistered securities broker, dealer, and exchange.
In a positive shift, recent months have seen U.S. regulators and lawmakers adopt a more accommodating approach toward cryptocurrencies.
Notably, the SEC greenlit exchange-traded funds directly investing in Bitcoin in January and moved toward approving Ether funds in May.
Cryptocurrencies have also gained traction as a topic in political arenas, with presidential candidates striving to be seen as supportive of the technology.
Amid a rallying crypto market, insiders predict that Kraken’s revenue this year could reach between $1 billion and $2 billion.
For perspective, Coinbase, which went public via a direct listing in 2021, is projected to generate $5.9 billion in revenue.
Initially, Kraken announced plans in 2021 for a public listing in 2022 through a direct market listing, after considering both a traditional IPO and a merger with a blank check acquisition company.
Later, Kraken shifted its strategy exclusively to a direct stock market listing, citing the company’s size as being too substantial for a merger with a SPAC.
This method allows the company to go public without issuing new stock.
Moreover, Kraken has been actively engaging investors to raise new capital aimed at boosting its valuation above $10 billion.
There have been hints of a fundraising round involving major players like Fidelity, Tribe Capital, and General Atlantic, though no official confirmations have emerged.