Q2 2023: crypto M&A deep dive

The number of crypto mergers and acquisitions (M&A) witnessed a significant decline in the second quarter of 2023, following a peak of 54 deals in the first three months of 2023. Last quarter, such activity dropped by approximately 40%, marking a substantial decrease in intra-sector deals of around 50%.

Architect Partners , a crypto advisory firm, reported that the number of transactions fell to 32 between April and June 2023. The decline was primarily driven by a significant drop in intra-crypto deals, which plummeted from 36 to 18. Conversely, "bridge" transactions, involving crypto and non-crypto companies, experienced a smaller decrease from 18 to 14. According to Dan Wang , Head of Growth at Architect Partners, crypto companies have become more cautious and selective in allocating their time and resources.

During the second quarter, ten out of the 32 M&A deals disclosed the acquisition costs, totaling $370 million. This amount reflects a decrease from the previous quarter's disclosed transaction volume of approximately $400 million. Notably, this is a significant difference from the peak of $1.6 billion in the first quarter of 2022. Although the 86 crypto M&A transactions in the first half of 2023 fall behind the record pace set in 2022, which saw 204 transactions and a 13% increase from 2021.

Among the noteworthy transactions during the second quarter was Laser Digital 's acquisition of Elysium LD Technology, Inc. , a post-trade solutions provider for FX and digital assets. The financial services firm Nomura 's digital asset business, Laser Digital, acquired Elysium for an undisclosed amount. Elysium provides "air traffic control" for its capital markets business, offering trade settlement, real-time position reporting, and a securities database with digital asset symbology. Michael S. Klena from Architect Partners highlighted that institutional-grade, cross-asset functionality is expected to influence decision-making in the crypto space.

Another significant transaction in the second quarter was Ripple 's acquisition of crypto custody tech provider Metaco for $250 million in mid-May. Metaco's Harmonize-branded product lineup is used by institutions such as 花旗 and 法国巴黎银行 , facilitating trading, settlement, transfer, and custody of digital assets. Ripple, specializing in blockchain-based international payments, aims to "transform" the $156 trillion cross-border payment market and enable the issuance and settlement of tokenized assets. Security is a crucial factor for these capabilities.

These transactions join other notable deals that occurred earlier in the year, including Coinbase 's acquisition of One River Asset Management 's digital arm in March and Consensys ' purchase of the blockchain development tooling platform HAL. The merger between Hut 8 Mining and US Bitcoin Corp., initially announced in February, is also a noteworthy transaction in 2023. This merger, which is still pending, is expected to provide the combined entity with a hash rate capacity of 7.5 exahashes per second (EH/s).