Ripple Dives into First Major Acquisition, Buys Crypto Custody Giant Metaco for $250 Million

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In a defining move for the crypto industry, U.S-based Ripple has purchased Switzerland-based Metaco, a leading crypto custody firm, for a whopping $250 million. This marks Ripple’s first major acquisition, as announced by the company on Wednesday.

Ripple Acquires Metaco Amid Legal Battle

Metaco is renowned for its advanced technology enabling financial institutions to manage and store digital assets securely. With an impressive clientele including financial powerhouses like Citi, BNP Paribas, and Societe Generale’s digital asset division, Metaco has secured a dominant position in the crypto custody market.

However, the past year has seen a cooling trend in investor interest towards crypto assets, largely triggered by a downturn in cryptocurrency prices and high-profile collapses of several crypto firms, including the U.S. exchange FTX. This has led investors to be extra vigilant about the storage and management of their crypto assets, particularly after experiencing substantial losses due to frozen withdrawals on various crypto platforms.

Ripple CEO, Brad Garlinghouse, anticipates a surge in demand for crypto custody services among institutional investors. He said,

“By focusing on the infrastructure … you’re not really subject to the same gyrations of the crypto winters.” He further added, “If ultimately you’re solving a clear problem at scale for these customers, there’s going to be demand there.”

As U.S. regulators heighten enforcement actions against crypto firms, Garlinghouse highlighted the appeal of Metaco’s Swiss location and non-U.S. workforce. “The rules of the road in other markets compared to the United States are clear and it’s that clarity of rules that allows companies to invest,” he explained.

Ripple’s Strategic Acquisition Underscores Confidence

Ranked as the world’s sixth largest cryptocurrency, Ripple has approximately $23 billion of its coin in circulation, according to CoinGecko, a respected market tracker. The $250 million acquisition of Metaco was financed with more than half in cash, and the rest in equity, as per Ripple’s announcement.

Ripple, a privately-owned entity, had previously shown interest in acquiring assets from struggling entities such as the bankrupt lender Celsius. The company had a brush with the U.S. Securities and Exchange Commission (SEC) in December 2020, facing charges of conducting a $1.3 billion unregistered securities offering. Ripple has since denied these charges, defending that its token is a currency, not an investment contract, and therefore does not require registration.

Despite the ongoing legal battle, Ripple’s financial position remains robust. Garlinghouse stated that Ripple is “not in any hurry” to conduct an IPO, and maintains an estimated $1 billion of cash on its balance sheet. This acquisition signifies Ripple’s intent to secure its footing in the crypto custody space, demonstrating that it is undeterred by the regulatory headwinds facing the crypto industry.