Dealmaking in the digital currency space is flourishing, buoyed by strong industry growth, political backing and supportive regulation.
In the US, there are signs that crypto is about to enter a golden era following a period of restrictive regulatory policies. President Donald Trump’s second term has been heralded as a turning point for the industry, with the president pledging to stop the regulatory crackdown on crypto seen in recent years. Bitcoin, for one, reached a record high of around US$109,000 in late January, up more than 50 percent since Trump won the election. Despite a drop-off since then, the currency stood at US$90,167 in late April—35 percent higher than at the same time last year.
Even before that, the cryptocurrency space had been experiencing solid growth. The US cryptocurrency market is expected to expand from US$9.8 billion in 2024 to US$29.8 billion by 2033, driven by tech innovation, mounting public interest and rising institutional adoption.
Europe is on a similar trajectory to the US. The European cryptocurrency market is predicted to grow from US$6.9 billion in 2024 to US$27.6 billion by 2033, with supportive regulatory frameworks expected to be a major contributor to this development. For example, the European Union’s “Markets in Crypto-Assets” legislation, which came into force at the end of 2024, aims to “put order in the Wild West of crypto-assets.”
Data and deals
In terms of overall related sectors, in both the US and Europe, dealmaking activity in the technology and financial services sectors recorded strong growth in 2024 and in the first quarter of this year, driven by ongoing digitalization and competitive pressures to deliver cutting-edge services to consumers. The financial sector, in particular, recorded significant year-on-year upticks in aggregate deal value as businesses sought out the latest digital tools.
Strong market tailwinds propelled a surge in crypto dealmaking across the US and Europe in 2024. According to Mergermarket data, 93 deals worth a combined US$4.1 billion were announced last year—a 2.5-times increase in value and 19 percent rise in volume year on year. Looking more closely, the US was responsible for the substantial growth in aggregate value in 2024. The 45 crypto deals announced were worth just over US$3.2 billion, an almost fivefold increase compared to 2023’s total. EMEA, meanwhile, registered 48 transactions (a rise of eight deals on the previous year), though aggregate value declined marginally, by 5 percent year on year, to US$918 million.
The first quarter of 2025 has been robust, despite disturbances in the wider M&A market. There were 23 deals across Europe and the US, valued at US$655 million.
Europe led the way in the first three months, with 12 deals totaling US$348 million, year-on-year increases of 9 percent and 21 percent. respectively.
US dealmaking slowed somewhat, with 11 transactions totaling US$307 million, year-on-year falls of 26 percent and 66 percent, respectively.
The US value drop-off is likely down to several outsized deals in 2024, the largest of which saw US-Irish fintech giant Stripe purchase stablecoin infrastructure provider Bridge Ventures. Valued at US$1 billion, the transaction is the crypto industry’s largest acquisition to date. Stripe is looking to enhance its stablecoin offering, which has emerged as an effective way to settle international payments using blockchain, owing to stablecoin’s ability to offer lower fees and facilitate instant settlement.
Trends and drivers
Financial institutions are expected to be the primary driver of crypto M&A. Mergermarket reporting suggests major groups such as Fidelity and Bank of America will enhance their crypto investment services via inorganic growth. Meanwhile, payments giants Visa, Mastercard and PayPal are looking to integrate blockchain systems through acquisitions.
Consolidation among crypto companies could also increase as they compete with traditional payments companies. Players such as Coinbase, Kraken and Circle are expected to execute add-on acquisitions in the near term. According to CEO Brian Armstrong, Coinbase expects to acquire two or three foreign cryptocurrency exchanges over the next couple of years.
Dealmakers expect Trump’s support for the industry, along with a more benign regulatory approach, to spur crypto M&A in the US. His nomination of crypto advocate Paul Atkins for chair of the US Securities and Exchange Commission is seen as conducive to a more supportive regulatory framework for deals. Other sectors set to benefit from a more liberal regulatory environment are credit and lending businesses and banking technology providers, providing a boost to the wider financial service industry.
Market challenges
Dealmakers will be looking to capitalize on crypto’s still-nascent regulatory environment before a more established structure is put in place, boosting M&A in the short term. However, the market’s relative immaturity raises its own challenges. M&A activity is still infrequent, meaning that there is no blueprint in place to follow. This can make deals more complex and lengthen the time they take to complete.
Another challenge is due to the nature of token markets themselves, which is at odds with the “traditional” style of carrying out M&A transactions. As the market is constantly in flux, this creates a more volatile environment for dealmaking. This sets deals in the crypto space apart from traditional finance models, necessitating a more creative approach.
As tokens represent a blended ownership model, operating in a token-based market also throws up questions surrounding ownership in the M&A process. This can introduce significant regulatory challenges to the M&A deal process, particularly surrounding securities laws.
Outlook
Fueled by supportive government policies on both sides of the Atlantic, the convergence of fintech and crypto could be a defining trend to watch as we move further into 2025.
Financial institutions and payments businesses are looking to attain efficiencies in their digital services, while up-and-coming crypto players will use M&A to achieve scale in an increasingly competitive market.
These driving forces have the potential to transform the market in a short space of time, and M&A will be central to achieving this goal.
