How Policy, Innovation, and Market Dynamics Are Driving Institutional Crypto M&A

The financial services industry is at a crossroads, with an indisputable trend of financial services moving into crypto. Digital assets built on the blockchain are transforming the financial ecosystem and shaping its future. Digital assets are no longer living on the fringe of the global financial system — they are becoming central to its future and to the movement of value through the capital markets and payments rails. The relatively small size of the crypto market pales to traditional financial markets, belying the enormous opportunity for digital assets and their growth trajectory. The total cryptocurrency market cap is approaching $3.8 trillion, approximating one segment of the MSCI World Index and dwarfed by the global market cap for equities, projected to reach $128.07 trillion this year. Yet, the capital markets environment is thriving, evidenced by Circle and eToro IPOs and these notable M&A trends: Partnerships : To deepen digital asset strategies – Kraken / NinjaTrader ($1.5B); Coinbase / Derebit ($2.9B); Ripple / Hidden Road ($1.25B); and JPMorgan Chase linking customers to Coinbase wallets, enabling crypto wallet funding via credit card rewards and direct account funding. Private Equity: To enter new market sectors through a portfolio-based acquisition strategy – Carlyle / SurePay (undisclosed); Bain Capital / Acrisure ($2.1B). Cross-Border Deals: To fortify digital transformation and gain a competitive advantage through broader market reach – Robinhood / Bitstamp ($200M); Swyftx / Caleb & Brown ($100M-200M est.). This activity is being driven by a highly-anticipated shift in policy: Regulatory action by the Securities and Exchange Commission (SEC) in 2024 allowed the inclusion of bitcoin and ether in spot commodity-based ETFs. This action, accompanied by the Commodities Futures Trading Commission (CFTC) clarifying the regulatory framework for options on these ETFs, paved the way for institutional investors to enter the market. In Chairman Atkins’ first major policy shift, the SEC inaugurated “Project Crypto” and approved in-kind redemptions for spot BTC and ETH ETFs, allowing authorized participants to create and redeem ETF shares directly in BTC or ETH. In coordination with “Project Crypto,” the CFTC Acting Chair Pham has initiated “Crypto Sprint,” seeking to enable “immediate trading of digital assets” on CFTC-registered exchanges. Also, the SEC’s Division of Corporation Finance stated that liquid staking activities covered in its statement issued yesterday do not involve the offer and sales of securities. Legislative action is taking shape with passage of the GENIUS Act and the CLARITY Act working its way through the Senate. It creates a regulatory framework underpinning “digital commodities” linked to the blockchain, excluding traditional products (bank deposits, commodities, securities, and investment vehicles) and divides primary regulatory oversight between the CFTC and SEC. Once enacted, regulators will be expected to quickly implement regulations and an interim registration framework. Also, the Senate Banking Committee released a discussion draft of the Responsible Financial Innovation Act to establish a larger role for the SEC than in the Clarity Act in classifying digital assets. The Trump administration heralded a new era for the growth of digital assets, reinforced in a comprehensive policy report released last week by the White House Working Group on Digital Asset Markets, with guidelines and recommendations covering stablecoins, digital asset market structure (including custody, token issuance and trading infrastructure), expanded CFTC regulatory authority and safe harbors for developers. Policy and capital markets activities are aligning. Crypto is no longer on the sidelines, it’s becoming core infrastructure for the future of finance. The changes we’ve witnessed so far this year will undoubtedly lead to a robust finish for 2025.