Ripple Acquires Crypto Custody Firm Metaco in $250 Million Deal

Ripple, a prominent U.S.-based cryptocurrency company, announced on Wednesday its first major acquisition, with the purchase of Switzerland-based crypto custody firm Metaco for a staggering $250 million, Reuters reported.

Metaco specializes in developing cutting-edge technology that enables financial institutions to securely store and manage digital assets. Notably, its client list includes renowned entities such as Citi, BNP Paribas, and Societe Generale’s digital asset arm.

The allure of crypto assets among investors has waned following a significant drop in cryptocurrency prices in 2022 and the subsequent collapse of major crypto firms, including the U.S.-based exchange FTX. The incidents have made investors increasingly wary of how and where crypto assets are stored, especially considering the risks associated with platforms freezing withdrawals and causing substantial losses.

In light of this, Ripple’s CEO Brad Garlinghouse expressed his anticipation of heightened demand for crypto custody services from institutional investors. He emphasized the importance of focusing on infrastructure, which provides stability and insulation from the volatility often associated with the crypto market. Garlinghouse stated, “If ultimately you’re solving a clear problem at scale for these customers, there’s going to be demand there.”

Garlinghouse also highlighted the appeal of Metaco being headquartered in Switzerland with a predominantly non-U.S. workforce, particularly given the mounting regulatory actions against crypto firms by U.S. authorities. He cited the clear regulatory framework in other markets, which fosters an environment conducive to investment.

Ripple’s native token, XRP, currently holds the position of the world’s sixth-largest cryptocurrency, with approximately $23 billion worth of coins in circulation, as reported by CoinGecko, a market tracker. Ripple revealed that over half of the $250 million acquisition cost was paid in cash, while the remaining amount was settled through equity.

In 2022, Ripple privately expressed interest in acquiring assets from bankrupt lender Celsius. However, last year, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple, alleging the company conducted an unregistered securities offering amounting to $1.3 billion. Ripple staunchly refuted the charges, asserting that XRP is a currency and not an investment contract requiring registration.

Despite these challenges, Ripple’s CEO emphasized that the company is “not in any hurry” to pursue an initial public offering (IPO) and disclosed that the company holds approximately $1 billion in cash reserves. The acquisition of Metaco signifies Ripple’s strategic move to strengthen its position in the crypto custody sector and capitalize on the anticipated surge in demand from institutional investors.