TBW - Why Crypto Needs M&A — and Why It's Not Happening

With a market estimated at 3,600 billion dollars, mergers and acquisitions occupy a central place in the workings of the global economy. For many companies, buying out an existing player remains a faster and cheaper strategy than building everything in-house: it enables them to grow, capture market share or even strengthen their positioning.

These operations are often designed to create value for both parties. The buyer sees it as a way of expanding its presence, accessing new markets or getting its hands on strategic technology. The seller, for his part, may be responding to financial objectives, achieving a good exit, anticipating retirement, selling part of the capital while remaining a shareholder, or selling a majority (51% or more) while entrusting management to new executives, with the possibility of continuing to receive dividends.

These transactions can involve both listed and unlisted companies, and are particularly common in private equity, where the procedures are often less complex than in the listed world.

In crypto, mergers and acquisitions also exist, but they remain on a much smaller scale than those seen in traditional finance. Yet these transactions play a structuring role in the development of a sector: they enable better allocation of capital and accelerate technological diffusion.

The digital asset ecosystem is no exception, even though there are still many obstacles to the growth of this type of transaction.

The workings of M&A in traditional finance

An M&A transaction results in an agreement between the two parties, whether it is a buyout or a 50/50 merger. This final outcome is the result of a structured process, in several stages:

• Identification and pre-selection: a company interested in an external growth operation identifies its potential targets with the support of investment banks, specialist firms or intermediaries.
• First due diligence: once the target has been identified, the buyer undertakes a rapid initial evaluation to assess the suitability of the deal.
• Valuation and structuring: the price of the target company is estimated using multiples (P/E, EV/EBITDA, EV/Sales) or methods such as discounted cash flow (DCF), the Gordon Shapiro model or CAPM.
• Letter of intent (LOI): the two parties agree on the broad outlines of the transaction via a non-binding letter of intent.
• Full due diligence: the buyer conducts an in-depth due diligence, while the seller checks the buyer's financial strength and reputation.
• Final Agreement: the final terms are agreed and recorded in a legally binding contract, often in the form of a Share Purchase Agreement.
• Financing: the acquirer secures the funds needed to complete the deal, in cash or securities.
• Closing: the transaction is finalised and the expected synergies can begin to be implemented.

The M&A sector plays a structuring role in traditional finance. The volume of transactions reflects companies' appetite for risk, the availability of financing and, more broadly, confidence in the economic cycle.

After a peak in 2021 marked by more than 65,000 deals worldwide - just as economies were recovering from the Covid shock - the M&A market has slowed markedly. In 2024, 36,000 deals were recorded, but their average size increased, with $600 billion more than in 2023. In 2025, the number of deals worth more than $30 million rises to 2,172, with a cumulative value of $1,200 billion.

Over the past decade, several major deals have resulted in positive effects measured by key indicators such as changes in market share or stock market performance. Verizon bought Vodafone's stake in Verizon Wireless for $130 billion, which buoyed the stock for five years. AB InBev grew from 21% to 31% of the global beer market after its $107 billion acquisition of SABMiller in 2016. AT&T snapped up Time Warner in 2018 to gain a foothold in streaming, with a stock market gain of 48.5% the following year.

Why M&A matters in crypto

The cryptocurrency market today remains highly fragmented. Numerous projects operate in a variety of areas: store of value, decentralised finance (DeFi), decentralised exchanges (DEX), centralised platforms (CEX), artificial intelligence, utilities, decentralised infrastructure (DePIN), gaming and NFT. This dispersion contributes to a fragmentation of liquidity and an inefficient allocation of capital.

About 10,385 crypto-assets are currently active, excluding memecoins. Of these, almost 90% are associated with protocols or projects that seek to offer a specific utility. Reserve-of-value assets, including stablecoins, alone account for 70% of total market capitalisation, leaving the remaining 30% to be spread across the other segments, which nevertheless concentrate the vast majority of tokens. This asymmetry illustrates significant fragmentation.

A revival of M&A transactions would help to correct this dynamic by encouraging consolidation. While some crypto-friendly banks or traditional fintechs are buying Web3 players, it is above all on a movement emanating from the crypto players themselves that a better structuring of the sector and a more efficient reallocation of capital depend.

Since the third quarter of 2023, crypto M&A deals have accelerated sharply. The compound annual growth rate (CAGR) in the number of transactions stands at 17.81%, while their cumulative value has risen from $1.4 billion to $2.5 billion, an increase of 78.5%. If we only compare deal sizes between Q3 2023 and Q4 2024, the increase reaches a factor x11, equivalent to a CAGR of 640.04%.

This upturn comes after a phase of decline initiated in 2022, marked by a bear market and an unfavourable macroeconomic context. In 2024, M&A activity returned to levels close to those of the previous bull phase, reaching a two-year high. The return of capital from major trading platforms and numerous venture capital funds largely explains this dynamic.

Since its inception, the crypto industry has attracted around $130 billion in venture investment, helping to bring about an ecosystem estimated to be worth $3.7 trillion at its peak in December 2024, i.e. a valuation multiple of 28.46. Excluding Bitcoin and stablecoins, this ratio falls to 10.83.

The textbook cases from traditional finance show that M&A can accelerate consolidation while generating operational benefits for both parties. By way of comparison, in 2024 traditional equity markets saw an inflow of capital of $3.6 trillion, for a generated valuation of $9.770 trillion, a multiple of 2.71 - well below the ratios seen in crypto.

The usefulness of M&A in the crypto ecosystem is therefore clear. Beyond the leverage effects on valuation, these deals enable those injecting capital to rationalise their costs, expand their presence in new markets, capture innovative technologies and strengthen their positioning.

More generally, greater consolidation of the sector via M&A deals would help to structure the market, by reducing the number of players while strengthening their solidity. This would promote sustainable value creation and limit the risks associated with the presence of unreliable players.

Status report: where are the M&A deals in crypto?

The number of tokens launched far exceeds the number of IPOs of traditional companies. In 2023, approximately 830,000 tokens were created, compared with 710,000 in 2022. By way of comparison, only 181 companies were floated on the stock market in 2023, and 154 in 2022.

This massive mismatch illustrates an overproduction of digital assets by conventional financial market standards. Even though almost 99% of these tokens become inactive within their first year, this dynamic reflects a significant fragmentation of the market.

Over the past two years, however, the sector has seen a turning point with several major acquisitions, relatively significant compared to the total size of the crypto market. The largest took place in May 2025, when Coinbase announced the purchase of Deribit for $2.9 billion. The deal was settled via $700 million in cash and 11 million shares of Class A common stock, valued at $2.2 billion at the time of the announcement.

With this buyout, Coinbase aims to strengthen its position in cryptoasset derivatives trading and compete with Binance in the options segment, particularly on Bitcoin and Ethereum. Deribit holds 85% of the options market on these two assets, with more than $1 trillion in volumes in 2024 and $30 billion in open outstandings. As a result, Coinbase's derivatives market share could rise from 12% to 35%, according to analysts.

>> By offering Deribit, Coinbase signs the biggest acquisition in crypto history

Another landmark deal: in March 2025, Kraken acquired futures trading platform NinjaTrader for $1.5 billion. The strategic objective for Kraken is to absorb the operational capabilities of NinjaTrader, which has 2 million active traders and an annual volume of $665 billion. With $42.8 billion in assets under management and a 28% market share in US futures, Kraken anticipates a 40% increase in trading volume.

>> Crypto derivatives: in the face of regulation, what solutions for traders?

>> Hyperliquid, dYdX, Jupiter, Vertex: the comparison of the best DEX Perp

The third largest deal involves Ripple, which has bought prime brokerage Hidden Road for $1.25 billion ($950 million in cash and $300 million in Ripple shares).

Hidden Road, which serves more than 300 institutional clients and trades $3 trillion a year, will become a subsidiary of Ripple. It will integrate XRP and RLUSD (Ripple's stablecoin) into its collateral management systems. With this deal, Ripple aims to offer real-time settlements for traditional and crypto exchanges on the XRP Ledger, while accessing a high-end customer base. The company also hopes to capture an additional 14% market share of the global prime brokerage market, valued at $12 trillion, taking its share to 22%.

Finally, in an environment where stablecoins are becoming increasingly important, M&A operations are also expanding into this segment. Stripe has acquired Bridge, a start-up specialising in stablecoin infrastructures, for 1.1 billion dollars, via a combination of cash and shares. The deal values Bridge at 15 times its 2024 revenue ($73m).

Stripe gets back 850 enterprise customers, 78% of whom use its services for cross-border payments with near-instant settlement depending on the blockchains used.

The acquisition also gives Stripe access to $4.3bn in potential stablecoin revenue by 2027. The buyout is due to Bridge's integration with multiple blockchains, facilitating fiat/stablecoin conversion, access to dollar liquidity for non-US customers, and a reduction in operational costs.

>> Stablecoins : Stripe buys Bridge for $1.1bn

The biggest drags on crypto M&A

By 2022, total M&A in the crypto industry was $8.3bn, compared to $4.5 trillion for traditional equity markets. This 500-fold difference far exceeds the gap in capitalisation between the two universes: 32,130 billion for the S&P 500 versus 800 billion for crypto at the end of 2022, a factor of 40.

Despite the strong potential for value creation, several factors continue to hold back the development of this market.

Regulation and compliance

The regulatory framework for digital assets is still under construction. Regulators are still trying to establish common foundations to govern a sector that does not fit into traditional categories. This uncertainty is a major obstacle for companies wishing to acquire Web3 players, as the authorities can slow down or block transactions.

The legal status of projects - sometimes considered financial securities, sometimes commodities - adds to the confusion and complicates the execution of deals. Increased intervention by regulators reinforces this effect.

In 2023, the SEC launched 46 legal proceedings against crypto projects, compared with 30 in 2022 (+53%). By 2024, this figure had fallen to 33 (-28.2%). There is a strong correlation between the intensity of legal proceedings and the fall in M&A activity: the correlation coefficient between the number of proceedings and the total value of deals is -75%, and that with the number of deals reaches -99%.

These figures, although drawn from a limited sample (3 years), show a direct link between legal pressure and the fall in deals. Faced with these risks, investors are becoming more cautious and reducing their capital contributions, fearful of financing potentially non-compliant projects.

Valuation and market specifics

Valuing a Web3 company is a tricky exercise. Traditional methods such as discounted cash flow (DCF) or the dividend discount model are difficult to apply to decentralised structures, sometimes without centralised governance or predictable cash flow. As a result, most valuations are based on sales multiples or, more rarely, on ratios such as EV/EBITDA or PER, as in the case of Coinbase's takeover of Deribit.

This lack of a standardised method deters many traditional investors.

Sheraz Ahmed (STORM Partners) sums it up perfectly: "Valuation remains a major hurdle, particularly for token protocols and ecosystems. Traditional methods such as DCF or EBITDA multiples are proving ill-suited to the crypto sector, where value creation follows unconventional patterns. Without recognised valuation frameworks, most investment banks limit their involvement to infrastructure companies, when they don't take a back seat altogether. Paradoxically, some of the most highly valued assets in crypto are not based on equities. Until academic research closes this gap by offering standardised valuation methods, advisers will continue to struggle to establish reliable prices and justify them to institutional investors. "

This is compounded by the high volatility of digital assets, which further complicates the estimation of a fair value and increases the risk of a mismatch between initial valuation and actual price at closing.

Integration issues

Integrating blockchain technologies into an existing infrastructure represents a significant technical challenge. The complexity of the systems - smart contracts, decentralised networks, specific protocols - requires extensive checks on technological property rights and robustness in terms of cybersecurity. Poor integration can have major operational and financial consequences.

The community governance specific to many projects adds a further obstacle. In decentralised or open source projects, the absence of a central authority can make negotiations lengthy or uncertain. The attempted takeover of Stargaze by Cosmos Hub illustrates this difficulty: the lack of community consensus weighed on the process.

Security risks and lack of standardisation

Security flaws are common in the crypto world. Exchange platforms and wallets are regularly targeted by attacks, increasing the risk of acquirers taking over a vulnerable infrastructure. The lack of storage standards (hot/cold wallets, custody solutions, insurance) further complicates risk assessment.

Finally, the absence of an established framework for M&A transactions in crypto lengthens lead times and makes processes more uncertain. The lack of standardisation forces parties to innovate on each deal, which can discourage traditional players used to more boxed-in procedures.

What could unlock M&As in crypto

The year 2025 marks a clear upturn in M&A deals in crypto. In less than six months, the total value of deals reached $6.1 billion, exceeding the cumulative total for 2023 and 2024. This momentum reflects a renewed interest in venture capital and a desire to position oneself in a sector that is in the midst of structuring.

For this movement to gain momentum, there are still several hurdles to overcome. The first concerns the law. Clarifying, harmonising and making regulations more flexible would lay a solid foundation for external growth operations. A clearer framework would encourage buyers and reduce legal uncertainties, particularly around the status of tokens or Web3 companies.

Market volatility, while impossible to eliminate, can be partially circumvented. Certain periods - notably the summer months - historically exhibit lower volatility. Scheduling deal closures to coincide with these windows can limit the effects. Another approach is to use stablecoins for settlements, or to set the valuation some time before signing to limit the risk of leaks or market manipulation.

Another key lever lies in creating valuation models tailored to the realities of the sector. Valuation standards specific to Web3 companies would make it easier to value assets, facilitate comparisons between projects, and make transactions easier to understand for investors and M&A advisers. Ultimately, these models could further structure the market.

For Philippe Rodriguez, Managing Partner at Avolta Partners, two conditions are essential for M&A in crypto to take off: regulatory clarity and institutional adoption. "When jurisdictions put in place harmonised frameworks and compliance standards, institutional investors will have the confidence to deploy significant capital. In parallel, the broader institutionalisation of crypto - including custody solutions, auditing standards and transparency on the blockchain - will reduce perceived risk and attract more substantial capital."

In the particular case of DAOs, M&A transactions involve going through a community vote, with full disclosure of terms.

This mechanism can play double-edged. On the one hand, an acquirer can convince the holders of the main voting powers, or even encourage them to vote in his favour, to the detriment of the majority of members, who are often in the minority in terms of voting rights but more numerous. On the other, a community opposed to an operation that is nevertheless beneficial can scupper a deal, unless the major voters change the outcome.

This balancing act reflects the specific features of decentralised governance and its limits when it comes to executing complex decisions such as a merger or acquisition.

Case studies

M&A deals between native crypto players already exist, albeit few and far between. One of the most notable is Polygon's acquisition of Hermez, a ZK-rollup scalability solution on Ethereum. The deal, worth around $250 million, was paid for in $MATIC tokens.

On the merger side, the most significant example is the ASI Alliance, concluded in 2024. Three projects - Fetch.ai, SingularityNET and Ocean Protocol - decided to combine their native tokens into a single asset called $ASI. The deal valued the combination at $7.5 billion.

The Big Whale's view

The cryptocurrency market remains extremely fragmented, with more than 10,000 active projects. As a sector matures, mergers and acquisitions become a natural lever for consolidation.

In equity markets, the influx of capital and concentration of players leads to greater capital efficiency, a reduction in the number of companies and the emergence of clearly identified leaders. M&A deals generally benefit shareholders on both sides.

Although average deal sizes are returning to 2021-2022 levels in traditional markets, valuation multiples show a sharp contrast: 2.71× for listed equities versus 28.46× for crypto at its all-time high. Even considering a more conservative multiple of 10.83×, the difference remains notable.

Yet the amounts involved in crypto M&A deals remain far lower than those in traditional finance. During the previous bear market, only $1.1 billion was raised through acquisitions. This trend is slowly being reversed, driven by changes in the regulatory framework, the growing involvement of governments, and the strategic interest of major players such as Coinbase, which put up $2.9 billion to buy Deribit.

The crypto M&A market is still young and faces several obstacles. The most important remains the regulatory environment, which is still heterogeneous depending on the jurisdiction, holding back the entry of new buyers. Assessing the value of a protocol is another major challenge, as is the volatility of the token at the time of acquisition. However, these risks can be partially circumvented by using multiple methods and stablecoin settlements.

Although it remains modest, the M&A crypto business is already playing a laboratory role. To scale up and catch up with the standards of traditional finance, several points still need to be addressed: regulatory clarification, improved valuation models, secure technologies, and standardisation of processes.

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