Jesse Powell, CEO of cryptocurrency exchange Kraken, sits for a photograph at the company's San Francisco office in 2014.
David Paul Morris | Bloomberg via Getty Images
Cryptocurrency exchange Kraken is considering going public through a direct listing in 2022, after seeing record trading volumes and new clients amid a surge in the price of bitcoin.
Founded in 2011, Kraken is one the world's biggest crypto exchanges. It has more than 6 million clients and is the fourth-largest exchange by trading volume, according to CoinMarketCap data.
Jesse Powell, Kraken's CEO and co-founder, said in an interview that the firm had benefited significantly from the bitcoin rally. Bitcoin hit a record high price of over $60,000 mid-March, with traders attributing the move to institutional investors jumping into the market.
"For us, any volatility is good but it's always better when it's on the way up," Powell told CNBC. "The first quarter just completely blew away the entirety of last year. We beat last year's numbers by the end of February. The whole market has really just exploded."
Kraken saw four times as many new users sign up to its platform in the first quarter of this year than it did in the second half of 2020. Spot trading volumes in the first quarter were 1.5 times higher than in all of last year, reaching a record level of $160 billion.
Coinbase, Kraken's main rival in the U.S., posted record quarterly revenue of $1.8 billion in the first quarter, which is more than it made for the whole of 2020. The company is set to go public in a blockbuster direct listing next week which could value it at as much as $100 billion.
Kraken is also weighing a stock market debut for 2022, Powell said.
"We're looking at being able to go public sometime next year," he said. "It would probably be a direct listing, similar to Coinbase."
Direct listings which see firms list without issuing any new shares have become a popular route among valuable tech companies looking to go public through an alternative to initial public offerings. IPOs have long faced criticism from tech investors for mispricing shares, resulting in issuing companies sometimes leaving piles of cash on the table.
Kraken is currently in talks with investors for a new round of funding, which could reportedly value it at as much as $20 billion.
"We have been in some talks to do another round," Powell said. "We've kind of been delaying a bit to see where the Coinbase valuation comes in at. I suspect that the price is gonna pump much higher than it has been trading at."
"We're not in a rush to raise capital," he said, adding the firm has a strong balance sheet. "The reason to do it would just be to bring on some more strategic investors who can help us with geographic expansion and growth."
Powell said the rise of NFTs, or non-fungible tokens, led to frenzied interest in alternative digital coins, such as ether. NFTs are a type of digital asset that represent ownership of unique collector's items, and they've exploded in popularity this year.
Ether, the digital currency of the Ethereum blockchain, notched a fresh all-time high of more than $2,100 on Tuesday, helping to lift the market value of all cryptocurrencies above $2 trillion for the first time.
"Ethereum is a big part of this," Powell said. "A lot of NFTs are created on Ethereum, a lot of these platforms operate on Ethereum."
Kraken's boss added that people are also turning to other digital currencies like flow and filecoin, as ether transaction fees spike due to the level of congestion on the Ethereum network. Ethereum is undergoing an ambitious upgrade aimed at making it faster and more secure.
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