Ripple, the U.S.-based cryptocurrency company, announced on Wednesday that it has completed its first major acquisition by purchasing Switzerland-based crypto custody firm Metaco for a sum of $250 million.
Metaco specializes in developing technology that enables financial institutions to securely store and manage digital assets. Among its notable clients are Citi, BNP Paribas, and Societe Generale’s digital asset division.
In recent times, investor interest in crypto assets has waned due to the decline in cryptocurrency prices in 2022 and the series of collapses experienced by prominent crypto firms, including the U.S. exchange FTX. Concerns about the safety and security of storing crypto assets have heightened as incidents of platforms freezing withdrawals have left investors facing substantial losses.
Ripple CEO Brad Garlinghouse expressed his anticipation of increased demand for crypto custody services from institutional investors. He emphasized the importance of focusing on the underlying infrastructure, which provides stability amid volatile market conditions.
Garlinghouse stated, “By focusing on the infrastructure… you’re not really subject to the same gyrations of the crypto winters. If ultimately you’re solving a clear problem at scale for these customers, there’s going to be demand there.”
With U.S. regulators intensifying their enforcement actions against crypto firms, Garlinghouse highlighted the appeal of Metaco being based in Switzerland and having a workforce composed of non-U.S. employees. He emphasized the clarity of regulations in non-U.S. markets, which enables companies to make investments with confidence.
Ripple currently ranks as the sixth largest cryptocurrency globally, with approximately $23 billion worth of Ripple coins in circulation, according to market tracker CoinGecko. The acquisition of Metaco involved a combination of cash and equity, with more than half of the $250 million purchase price paid in cash.
As a privately-owned company, Ripple has shown interest in acquiring assets from bankrupt lender Celsius in the past. In December 2020, Ripple faced a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) alleging that the company conducted an unregistered securities offering amounting to $1.3 billion.
Ripple has vehemently denied the charges, asserting that its token is a currency and does not need to be registered as an investment contract.
Regarding plans for an initial public offering (IPO), Garlinghouse emphasized that Ripple is in no rush and disclosed that the company currently holds approximately $1 billion in cash on its balance sheet.
