Crypto M&A Surges as Integration With Traditional Finance Systems Gains Momentum
As cryptocurrencies continue to be gradually integrated into the broader financial system, the critical first step of converting fiat currency into crypto offers a rare investment opportunity for investors looking for a way to get exposure to the success of cryptocurrencies without necessarily holding any coins.
Multinational financial services like Visa and Mastercard have already begun processing these types of transactions in partnership with on-ramp processors making the process more efficient than ever.
This trend is likely to spur some exciting developments in the financial sector, like an increase in the number of mergers and acquisitions in the space. According to PwC’s 3rd Global Crypto M&A and Fundraising Report, the total value of M&As within crypto more than doubled in 2020, to just over $1.1 billion. They expect to see further consolidation in the industry with some of the larger, well-funded, or profitable firms continuing their M&A activities.
Now that some crypto firms are so large, big traditional finance corporations may be forced to acquire at least some of them creating an exciting opportunity for investors looking to expand their portfolio into crypto.
As a matter of fact, even amid market lows during the first half of 2020, cryptocurrency-related M&A hit $600 million, more than the total for all of 2019. Some of the most notable deals in the crypto space in 2020 include major crypto exchange Binance’s acquisition of CoinMarketCap, which was valued at $400 million, and Coinbase’s $41.79 million acquisition of Tagomi, a New York-based crypto brokerage.
On-Ramp M&A Activity Takes Centre Stage
For the process of obtaining and spending cryptocurrency, the analogy of a highway makes it easy to explain to new crypto investors. There are On-ramps that help you get onto the crypto-highway and off-ramps that help you get off again. In essence, a cryptocurrency on-ramp refers to an exchange or similar service where you can offer fiat money in return for cryptocurrency.
This is why on Feb 10, Mastercard announced that it would begin supporting select cryptocurrencies on its payment network. The financial institution took the bold step after tracking customer usage as it relates to cryptocurrency, particularly Bitcoin and realizing that cryptocurrencies were becoming more accepted as an investment and payment method. In March Visa also announced that it would begin accepting payments in the stablecoin USD Coin.
Canadian listed TechX Technologies Inc. (CSE:TECX) (OTC:TECXF) (FRA: C0B1) has also been making significant inroads in the On-Ramp space. It started out by acquiring fiat-to-crypto gateway Xport Digital for C$5 million and later announced the signing of a definitive agreement to acquire Mobilum, a fintech payment processing technology and digital wallet, for C$16 million.
Mobilum’s simple-to-use on-ramp solution makes integration easy for businesses whose users buy and sell cryptocurrencies with credit and debit cards. Mobilum guarantees zero chargebacks and claims that they have the highest acceptance rates, and the lowest transaction fees in the industry at 2.99%.
At present, Mobilum’s daily processing volume ranges from C$100,000 to C$250,000 in transactions for cryptocurrency exchanges that include KuCoin, the sixth-largest cryptocurrency exchange in the world. Supporting over 200 cryptocurrencies and 80+ fiat currencies, Mobilum’s payment gateway services are accessible to over 8 million global users.
Going forward, with bitcoin and crypto now turning the heads of financial institutions and banks, it’s likely that 2021 (and beyond) will bring a greater number of ‘traditional’ finance companies buying up firms within crypto. Furthermore, we are likely to see an increase in crypto firms acquiring companies outside of the sector.
With such developments in play, it could mark the beginning of a potentially exciting journey for someone expanding their crypto holdings or making their first investment in the sector.