FalconX, a digital asset trading and brokerage firm, is looking for acquisitions after experiencing a record quarter. The company is preparing for an expected surge in consolidation within the crypto industry in 2025, according to Bloomberg. This move comes as FalconX anticipates rising business costs in the crypto sector. It is driven by increased institutional interest and tightening regulations.
Mr. Raghu Yarlagadda is the co-founder and CEO of FalconX. He said that the firm is still considering opportunities for mergers and acquisitions. According to Yarlagadda, the cost of participating in the crypto industry will rise with increasing numbers of institutional participants and regulatory requirements. This, he added, will lead to a wave of mergers and acquisitions in the next year.
The CEO noted that FalconX is now keen on companies operating in institutional infrastructure, data and analytics, tokenization, and trading teams, among other areas. The firm also needs to build up its position and be ready for the next round of consolidation, which is already expected in the near future.
Although M&A transactions in the digital asset industry have not been commonplace, several transactions have occurred. For example, Robinhood Markets purchased Bitstamp for $200 million, and Zodia Markets purchased Elwood Capital Management. Nevertheless, the total activity in M&A in the cryptocurrency sector was somewhat lower in the third quarter after rising in the first half of this year.
FalconX Eyes Growth Through Acquisitions Amid Strong Revenues
FalconX is a relatively young company that was established in 2018 and is located in San Mateo, California, USA. However, it has been rapidly developing. The firm was valued at $8 billion during a $150 million funding round in 2022 and is backed by investors like Tiger Global and GIC. FalconX has also established a rich client list with over 600 institutional customers.
The firm’s financial results for the second quarter of 2024 were good. Total revenues for the first quarter increased 2.5 times compared with the same period of 2023, and revenues from derivatives trading more than tripled. This strong performance is viewed as a positive as FalconX seeks out acquisitions in future months and years.
While crypto venture capital has slowed following the industry’s struggles in 2022, Yarlagadda remains optimistic. He believes the survivors of last year’s market turmoil are now leaner, faster, and stronger. It gives FalconX the resources needed to pursue future growth through acquisitions.
