PYMNTS MonitorEdge May 2024

Crypto.com VC Arm Cautious of Outsized Valuations

Crypto.com’s venture capital unit has doubts about some of the sector’s steep valuations.

That’s according to CEO Kris Marszalek, who spoke on the topic in an interview with Bloomberg News published Wednesday (April 17).

As the report noted, Marszalek is making this observation as a rally in the crypto sector has kicked off an uptick in billion-dollar funding rounds for early-stage crypto startups. Bloomberg compares this to the “investment frenzy” that came with the COVID-era bull run in tokens, with very mixed results.

“We want the financial return,” Marszalek told the news outlet. “At this moment, valuations being thrown around by project teams are very generous.”

According to Bloomberg, Crypto.com Capital has scaled back its investment activity since 2022, a year that began with the company having $500 million to invest in crypto startups. Analysts at Dealroom logged just four Crypto.com investments since the start of last year, based on publicly available information, compared with 35 in the two years before.

The fund wanted “to scale back a little bit” even as crypto venturing activity grew, Marszalek said. “We try to be reasonable on this,” he added. 

The unit has made around 70 investments to date, spending a nine-figure sum, according to Marszalek, though he declined to give Bloomberg an exact figure.

In an earlier interview this week with Marszalek, the CEO told Bloomberg Crypto.com was in the process of hiring 1,400 employees, a little more than a year after the company announced it was letting go of one-fifth of its workforce

The company has added 700 employees since November and plans to add another 500 people in customer service and 200 in corporate positions, Marszalek said. That report notes that Crypto.com is not the only company in the crypto sector that is expanding its staff, with Coinbase Global, Kraken, Binance and Gemini all recently adding positions.

Meanwhile, Ripple CEO Brad Garlinghouse predicted earlier this month that 2024 will see the cryptocurrency’s market capitalization surpass the $5 trillion mark.

Speaking to CNBC, Garlinghouse said he expects the value of the crypto market to double this year, due to factors like the approval of the first U.S. spot bitcoin exchange-traded fund (ETFs) and the upcoming “halving” of bitcoin.

“I’ve been around this industry for a long time, and I’ve seen these trends come and go,” Garlinghouse said. “I’m very optimistic. I think the macro trends, the big picture things like the ETFs, they’re driving for the first time real institutional money.”

“You’re seeing that drives demand, and at the same time demand is increasing, supply is decreasing,” he added. “That doesn’t take an economics major to tell you what happens when supply contracts and demand expands.”