Kraken Seeks over $100M Funding Ahead of Potential IPO: Report

Cryptocurrency exchange Kraken is seeking over $100 million before a potential initial public offering (IPO), Bloomberg reported. The crypto exchange, founded in San Francisco in 2011, has long discussed going public. This move is reportedly fueled by a surge in investor interest and a perceived softening of regulations against digital assets.

Discussions with Potential Investors

According to insiders, the fundraising could be completed by the end of the year. Kraken aims to attract a special-purpose acquisition company to ensure a successful IPO, potentially as soon as next year. So far, the discussions with potential investors have been informal, focusing on terms and valuations.

Kraken's journey toward an IPO has not been without challenges. The exchange has faced a downturn in crypto 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 favorable stance toward crypto. The SEC approved exchange-traded funds investing directly in Bitcoin in January and made steps toward approving similar funds for Ether in May. Crypto has also emerged as a political issue, with presidential candidates vying to appear crypto-friendly.

With the crypto market rallying, Kraken is expected to generate $1 billion to $2 billion in revenue this year, according to insiders. By comparison, Coinbase, which went public through a direct listing in 2021, is forecast to have revenue of $5.9 billion.

Valuation and Funding Talks

News about Kraken going public first emerged in 2021, when the exchange announced that it was considering a public listing in 2022 through a direct market listing. Initially, the exchange planned for a traditional IPO or a merger with a blank check acquisition company.

Later, Kraken clarified that it was only considering a direct stock market listing as the company was too big for a SPAC merger. In a direct listing, the company goes public without issuing any additional stocks.

Additionally, the company engaged investors to raise fresh capital that will boost its valuation to more than $10 billion. Sources disclosed a potential fundraising round with Fidelity, Tribe Capital, and General Atlantic for an unknown sum, but none of them officially confirmed the report.