US-based cryptocurrency exchange Kraken, is reportedly considering a final funding round as it explores the possibility of an initial public offering (IPO), according to sources familiar with the matter. The exchange has received inquiries from potential investors amid the current rally in the digital asset market.

Kraken Gears Up For Pre-IPO Funding Round

According to a Bloomberg report, sources suggest that Kraken is likely to seek more than $100 million in funding. The renewed interest from investors, coupled with a perceived shift in US regulatory attitudes towards digital assets, has reignited discussions about companies in the crypto sector going public. Just recently, Bitcoinist also reported that Robinhood acquired another crypto exchange Bitstamp.

Kraken has been contemplating an IPO since at least 2021. The funding round, potentially designated as a pre-IPO round, is expected to be finalized by the end of the year, according to one source. 

Kraken, founded in 2011 in San Francisco and operating under its parent company Payward, has stated that it remains committed to its mission of accelerating global adoption of cryptocurrencies.

While Kraken has expressed its intentions to go public for several years, previous market downturns and regulatory challenges, including ongoing legal battles with the US Securities and Exchange Commission (SEC), have hindered its progress. 

Kraken settled one case with the SEC in 2020 but is still involved in another case in which it is accused of operating an unregistered securities broker-dealer, clearing agency, and exchange. The company disputes these allegations.

Favorable Regulatory Winds

In recent months, US regulators and politicians have taken a more favorable stance toward cryptocurrencies as the US presidential campaigns have shifted, with crypto becoming one of the main issues in the race for the White House. 

The US SEC’s approval of exchange-traded funds (ETFs) investing in Bitcoin and its steps towards approving similar funds for Ethereum, also indicate a growing acceptance of digital assets. 

According to Bloomberg, with the surge in crypto prices throughout the year, Kraken is projected to generate revenue between $1 billion and $2 billion this year, according to insiders. 

In comparison, Coinbase, the largest US crypto exchange, which went public through a direct listing in 2021, is estimated to achieve revenue of $5.9 billion, as compiled by Bloomberg analysts.

Kraken is now actively seeking a company to join its board and ensure a successful IPO, potentially as early as next year. The discussions thus far have involved informal exchanges of terms and valuations, without formal documentation.

The total crypto market capitalization now stands at $2.5 trillion, while Bitcoin, the largest cryptocurrency on the market, is consolidating above the key $70,000 threshold.

Featured image from DALL-E, chart from TradingView.com