Kraken Eyes Q3 IPO After Deutsche Börse Buy and Fedwire Access

Kraken confidentially filed for an initial public offering late last year and is targeting a public listing in the third quarter. An April transaction priced the company at about $13.3 billion, below a prior $20 billion valuation tied to a November share sale.

Deutsche Börse agreed to purchase $200 million of existing shares in Payward Inc., Kraken’s parent company, for an implied roughly 1.5% fully diluted stake. The purchase is expected to close in the second quarter pending regulatory approval. The seller of the shares was not disclosed.

In March, the Federal Reserve Bank of Kansas City granted Kraken a limited purpose account that permits direct use of the Fedwire payments system. That account allows Kraken to settle payments on central-bank rails without relying on a partner bank. Kraken Financial plans to introduce Fedwire capabilities in stages, beginning with institutional client activity.

Kraken operates under a Wyoming Special Purpose Depository Institution charter, a full-reserve bank model established in 2019 for digital-asset firms. SPDIs can accept deposits and provide custody and asset servicing. Under the Federal Reserve Board’s 2022 tiered framework, Kraken Financial is listed as a Tier 3 applicant, which is subject to the strictest level of review.

At a Washington event, co-CEO Arjun Sethi told attendees that retail users want access to the same trading tools used by major institutions and added, “What they want at the end of the day is what Citadel and Jane Street have, or JPMorgan has, and they want it accessible to them.” He said Kraken’s mission is to make those products available to customers and pushed back on extreme predictions about AI’s impact on software-as-a-service companies.

Thomas Book, a member of Deutsche Börse’s management board, described Kraken as “a perfect partner for us to further accelerate on this path of creating a fully hybrid market infrastructure,” and said the aim is to create “one integrated value chain” for tokenized or fully digital assets.

The investment follows a partnership announced by the two firms in December. Other traditional market operators have also made sizeable investments in crypto platforms this year, reflecting growing institutional interest in digital-asset infrastructure.