Cryptocurrency operators set for consolidation in fragmented Asian market, Binance says
- Recent deals suggest a pick-up in M&A as Binance, Gojek expand footprint in region
- Higher trading volatility, stricter anti-money-laundering rules could raise more regulatory requirements
M&As in the industry plunged 76 per cent to US$451 million in 2019, with the bulk of transactions involving exchanges, wallet and payment services, according to a report published by PwC on Monday.
The number of deals fell 40 per cent to 114, with the US accounting for half of them while Asia’s share increased to 22 per cent from 14 per cent. Binance, which operates the biggest crytocurreny exchange, bought data provider CoinMarketCap last week, adding to the nine transactions it completed in 2019.
“In Asia, we are interested in exchanges that have existing banking relationships, which enable them to accept trading in local fiat currencies,” said Zhao Changpeng, chief executive of Binance. He is also keen on e-commerce and payment services companies backed by blockchain technology.
Senior executives at some exchanges said stricter oversight could intensify this year as the industry fails to shake off the perception – and in some case, real incidences – of money laundering, terrorist financing and security flaws within its infrastructure.
With Singapore and Hong Kong tightening anti-money-laundering rules in the industry, Zhao expects smaller exchanges to struggle with the cost of keeping up with the demand.
There will be consolidation as higher regulatory requirements make it harder for smaller exchanges to survive, Zhao added. Apart from Binance, recent deals suggest interest is growing.
Gojek, an Indonesian on-demand platform operator, bought a stake in Philippine cryptocurrency wallet operator Coins.ph for US$72 million in January. Binance paid US$8 million for Indian exchange WazirX last November.
