M&A season in the crypto industry is heating up. On Wednesday, New York-based Talos, which develops digital asset trading infrastructure, announced that it had acquired the blockchain data provider Coin Metrics. The deal closed at over $100 million, according to a source familiar.
It’s the latest in a series of major acquisitions in the crypto space, which kicked off last year when the payments giant Stripe bought the stablecoin company Bridge for $1.1 billion, and has continued with other mammoth deals, including several by the leading U.S. crypto exchange Coinbase.
In an interview with Fortune, Talos cofounder and CEO Anton Katz said that the acquisition reflects Talos’ ambitions to become a one-stop shop for institutional players looking to get into digital asset trading and portfolio management, with Coin Metrics a leader in supplying both on and off-chain data. “Digital assets are actually changing how finance is doing things behind the scenes,” he said, citing recent developments like Robinhood’s foray into tokenized stocks. “This is the next evolution for us.”
One-stop shop
Founded in 2018 by Wall Street veterans Katz and Ethan Feldman, who serves as the company’s CTO, Talos’ software helps institutional players, such as hedge funds and asset managers, trade digital assets like Bitcoin and Ethereum. They both worked at Broadway Software, which developed similar products for traditional financial assets, deciding to move into crypto because they believed it would become an institutional asset class.
The past seven years have been bumpy for the industry, with a series of high-profile collapses and ensuing regulatory backlash, meaning that would-be Talos clients such as banks and brokerages have tread carefully with blockchain technology. But through the turmoil, Talos attracted substantial venture investment, including a $40 million round in 2021 led by Andreessen Horowitz, and a $105 million round in 2022 that valued Talos at $1.25 billion. Other investors include PayPal and Fidelity’s venture arms, as well as Citi and BNY.
By tapping into liquidity providers, from well-known centralized exchanges such as Coinbase to decentralized options such as Uniswap, Talos can provide sophisticated trading infrastructure to major financial firms conducting algorithmic trading in the crypto space. Talos also has a white-label platform that allows sell-side companies, such as brokerages and super apps, to offer trading to their clients.
Katz said that he has been friendly with Coin Metrics’ leadership team since both companies began, with Coin Metrics launching just a year before Talos. Though Talos can capture pricing data from the liquidity providers that it taps into, Katz said that the Boston-based Coin Metrics has more access to historical and on-chain data, as well as more capabilities in terms of servicing clients.
According to Katz, discussions between the two companies began about four months ago, with Talos planning to fully incorporate Coin Metrics into its team and platform. He said that Talos did not raise additional capital to finance the acquisition.
With a regulatory thaw under President Trump, Katz believes the debate is settled as to whether major institutions will move into crypto and need software like Talos’. “I don’t know if there are any large financial institutions left that we are not in conversations with,” he said.
Instead, the debate over the future of digital assets will likely now extend beyond popular cryptocurrencies. That includes tokenized versions of traditional assets, from public equities like Apple and Tesla to shares in private companies to private credit funds, which means issuing them with a blockchain wrapper to facilitate trading, settlement, and ownership. “Our bet is that digital assets are going to be the underlying technology of financial markets,” Katz said.
While acquisitions can often be a precursor to initial public offerings, Katz said that he’s not ready to make any strong commitments, despite a flurry of crypto companies filing with the Securities and Exchange Commission. Still, he left the door open. “Without a doubt, it’s one of the considerations,” Katz told Fortune. “Talos is in a great position in the market.”
