Cryptocurrency exchange Kraken is seeking over $100 million in funding ahead of a potential initial public offering (IPO), driven by a surge in investor interest and a relaxation of regulatory pressures on digital assets. The exchange, founded in San Francisco in 2011, has long been in discussions about going public.

Discussions with Potential Investors

Insiders reveal that the fundraising efforts could be completed by the end of this year. Kraken aims to attract a special purpose acquisition company (SPAC) and could go public as early as next year. So far, discussions with potential investors have been informal, primarily focusing on terms and valuation.

Kraken's path to going public has not been smooth. The exchange has faced a decline in cryptocurrency prices and conflicts with the U.S. Securities and Exchange Commission (SEC). Last year, Kraken reached a settlement with the SEC over a case but still disputes allegations of operating as an unregistered securities broker, dealer, and exchange.

In recent months, the SEC and politicians have shown a more favorable attitude towards cryptocurrencies. The SEC approved a Bitcoin exchange-traded fund (ETF) for direct investment in January and took steps to approve a similar Ethereum fund in May. Cryptocurrency has also become a political issue, with presidential candidates vying to show support for it.

Insiders reveal that with the rebound of the cryptocurrency market, Kraken's revenue this year is expected to reach $1 billion to $2 billion. In comparison, Coinbase, which went public via direct listing in 2021, is projected to have revenue of $5.9 billion.

 Valuation and Funding Negotiations

News of Kraken's plans to go public first emerged in 2021 when the exchange announced it was considering going public through a direct listing in 2022. Initially, the exchange planned to use the traditional IPO route or merge with a SPAC.

Later, Kraken clarified that due to its large size, a SPAC merger was not suitable, and it would only consider direct listing on the stock market. In a direct listing, a company can go public without issuing new shares.

Additionally, the company has been engaging with investors to raise new funds, aiming to increase its valuation to over $10 billion. Reports suggest that Fidelity, Tribe Capital, and General Atlantic may participate in a funding round of an unspecified amount, although none have formally confirmed their involvement.