On Wednesday, Ripple, a U.S.-based crypto firm, announced its first major acquisition of Switzerland-based crypto custody firm Metaco for $250 million.
Metaco specializes in developing technology that enables financial institutions to securely store and manage digital assets. Notable clients of Metaco include Citi, BNP Paribas, and Societe Generale’s digital asset division.
The cryptocurrency market experienced a decline in prices in 2022, leading to decreased investor interest in crypto assets. Additionally, several major crypto firms, including the U.S. exchange FTX, faced collapses, which made investors more cautious about asset storage. The incidents of freezing withdrawals on crypto platforms resulted in significant losses for many investors.
Ripple CEO Brad Garlinghouse anticipates a growing demand for crypto custody services from institutional investors. He emphasized that by focusing on the infrastructure aspect of cryptocurrencies, one can mitigate the volatility associated with market downturns. He stated, “If you’re ultimately solving a clear problem at scale for these customers, there will be demand.”
Garlinghouse also highlighted the appeal of Metaco being based in Switzerland with a non-U.S. workforce, particularly as U.S. regulators intensify their enforcement actions against crypto firms. The clarity of regulatory rules in markets outside the United States enables companies to invest with confidence.
According to CoinGecko, Ripple ranks as the sixth largest cryptocurrency globally, with approximately $23 billion worth of the coin in circulation. The acquisition of Metaco involved a payment of over half the $250 million in cash, with the remainder in equity, as confirmed by Ripple.
Ripple, a privately-owned company, expressed interest last year in acquiring assets, including those from bankrupt lender Celsius. In December 2020, Ripple faced a lawsuit from the U.S. Securities and Exchange Commission (SEC), accusing the firm of conducting an unregistered securities offering amounting to $1.3 billion. Ripple has disputed the charges, asserting that its token is a currency and does not necessitate registration as an investment contract.
Garlinghouse stated that Ripple is not in a rush to pursue an initial public offering (IPO) and revealed that the company has approximately $1 billion in cash reserves.
