Number of crypto M&A deals plummeted in Q2

There was a sharp decline in the number of crypto mergers and acquisitions (M&A) in Q2 2023, with intra-sector deals experiencing a 50% fall-off.

While deal activity had hit an all-time quarterly high in the first three months of 2023 — 54 transactions — that figure dropped to 32 between April and June, according to crypto advisory firm Architect Partners.

The quarter-over-quarter decline was driven by a drop in intra-crypto deals, which fell 50% from 36 to 18, Architect Partners Head of Growth Dan Wang told Blockworks.

“Bridge” transactions — deals between crypto and non-crypto companies — saw less of a decrease, dropping from 18 to 14.

“Crypto companies are being more prudent and selective on where and how they choose to allocate time and resources,” Wang said.

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Ten of the 32 M&A deals during the second quarter disclosed what the acquirer paid, amounting to $370 million, according to Wang. This compared to roughly $400 million of disclosed transaction volume last quarter — a marked difference from when that number peaked during the first quarter of 2022 at $1.6 billion.

The 86 crypto M&A transactions in the first half of 2023 is behind the record pace set in 2022 — a year that saw 204 transactions, a 13% increase from 2021.

Notable deals

Among the latest, and more significant transactions, was Laser Digital’s buy of Elysium Technology Group, a post-trade solutions provider for FX and digital assets. The company made the acquisition for an undisclosed amount.

Laser Digital is the digital asset business of Japan-based financial services firm Nomura.

Elysium offers “air traffic control” for its capital markets business — comprising trade settlement, real-time position reporting, and a securities database with digital asset symbology, Architect Partners’ Michael Klena said in a June 30 note.

Institutional-grade, cross-asset functionality is set to drive client decision-making in the crypto space, he added.

“As the roles market participants play in digital asset markets continue to evolve, Laser Digital is positioned as a key FX and digital asset post-trade infrastructure provider with traditional financial institution roots, which is the counterparty profile that institutions want to do business with,” Klena wrote.

Another particularly notable transaction during the second quarter was Ripple’s buy of crypto custody tech provider Metaco for $250 million in mid-May, Wang told Blockworks.

Citibank and BNP Paribas are among the users of Metaco’s Harmonize-branded product lineup, which allow institutions to trade, settle, transfer and custody digital assets.

The acquirer, a specialist in blockchain-based international payments, seeks to “transform” the $156 [trillion] cross-border payment market” and help issue and settle tokenized assets — capabilities for which security are critical, Klena wrote in a May 17 note.

“Metaco’s custody technology and related products allow Ripple to protect client assets, control the evolution of the technology and related services as needs dictate and represent a potentially attractive new revenue stream as assets under custody scale,” Klena added.

These transactions join other significant deals done earlier this year, such as Coinbase’s buy of One River Digital Asset Management in March and ConsenSys’s acquisition of blockchain development tooling platform HAL.

Wang also pointed to the merger between Hut 8 Mining and US Bitcoin Corp., first revealed in February, as a notable 2023 transaction. That combination, set to give the company a hash rate capacity of 7.5 exahashes per second (EH/s), is still pending.

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