Gemini, the cryptocurrency exchange that is widely expected to go public, has bought Shard X.
Gemini did not disclose financial terms of the deal. Founded in 2018, Shard X develops secure multi-party computation (MPC) cryptographic technology. The software will help Gemini quickly transfer customer assets, provide support for new asset listings and speed usage on the Gemini platform. All three Shard X founders, Yaniv Neu-Ner, Nikita Lesnikov, and Navaho De Wet, are joining Gemini. The London startup will become part of Gemini’s United Kingdom affiliate.
Shard X’s technology will provide “super safe and secure custody with quicker access,” said Noah Perlman, Gemini’s chief operating officer. “We’re super excited about it,” he told Barron’s.
The deal is the third acquisition for Gemini in the past two years. The New York company acquired crypto credit card company Blockrize in January and, in November 2019, it bought NFT marketplace Nifty Gateway.
Brothers Cameron and Tyler Winklevoss founded Gemini in 2014. The company employs more than 440 people and has over $30 billion of crypto assets under custody. Gemini provides a platform that allows users to buy, sell, store, and earn interest on more than 40 cryptocurrencies, including Bitcoin, Dogecoin and Ether. The brothers remain “very hands on,” with Gemini, Perlman said. Tyler is CEO while Cameron is president.
Bitcoin has experienced wild swings in the past year and is currently trading off more than 50% from its all time high. Gemini still has “incredible conviction” in bitcoin, Perlman said. “It’s still one of the best performing asset classes,” he said. “We’re not hung up on price.”
Gemini is more interested in building products for its customers, Perlman said. He pointed to Gemini Earn, which lets users earn up to 7.4% in interest on their cryptocurrency. The company is also partnering with Mastercard (ticker: MA) to launch a crypto rewards credit card that’s expected later this summer. Rather than getting airline miles or hotel points, users of the Gemini card can earn up to 3% back in crypto rewards, Perlman said. The card already has a waitlist of nearly 300,000 people.
“We have a lot of people who are cryptocurious and fearful and don’t want to invest. This allows them to stick their toe in,” he said. Users of the Gemini credit card can get rewards in any cryptocurrency that is listed on its platform, Perlman said.
Bitcoin and cryptocurrencies are enjoying a moment. Public interest in the crypto asset class has surged recently, stoked in part by the much anticipated public offering of Coinbase Global (COIN), the world’s biggest cryptocurrency exchange, which listed its shares in April. One month later, Elon Musk, the billionaire entrepreneur and CEO of Tesla, appeared on “Saturday Night Live” in May. (Musk has promoted cryptocurrencies in his tweets, while Tesla bought $1.5 billion worth of Bitcoin in February.)
“We are seeing incredible interest in the space both by retail users and traditional financial institutions. There are lots of conversations around the asset class,” Perlman said. “By the same token, we view it as though we are in the early days [of cryptocurrencies]. There is still lots of education to do.”
Roughly 14% of the U.S. population, or 21.2 million adults, own cryptocurrencies, Gemini said in a recent “2021 State of U.S. Crypto Report.” More men than women own cryptos; only 26% of current crypto holders are female. The average crypto owner is a 38-year old male that makes about $111,000 a year, Gemini said.
Gemini has launched an open access site, called Cryptopedia, to help educate. Consumers who visit the site can learn about investing, trading and security of cryptocurrencies.
Gemini, which has not taken outside capital, is widely expected to follow Coinbase Global to the public markets. Perlman thinks the Coinbase IPO was “good for crypto overall,” he said. Gemini, however, has not made a decision on a possible offering, he said: “We continue to assess the market. The name of the game is optionality.”
When asked if Gemini is considering going public via a direct listing like Coinbase, or merging with a special purpose acquisition company or using a traditional IPO, Perlman said: “We will look at everything and see what makes most sense for us at the time.”
Write to Luisa Beltran at luisa.beltran@dowjones.com
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Cryptocurrency Exchange Gemini Buys Shard X - Barron's
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