Coinbase Signals Bitcoin M&A Appetite After Circle-Poloniex Deal

Mar 05, 2018

Coinbase, the largest U.S. Bitcoin exchange, has poached a top dealmaker from LinkedIn as it seeks to make bigger acquisitions, a move that could spark consolidation in the cryptocurrency industry.

Emilie Choi started Monday as Coinbase's vice president of corporate and business development, the company said. At LinkedIn, Choi oversaw more than 40 acquisitions in her role as VP of corporate development, including its $1.5 billion purchase of Lynda, an online education startup, in 2015.

"If you ask anyone in [Silicon] Valley, she is absolutely top of her field in business development," Asiff Hirji, COO of Coinbase, told Fortune. "Given how rapidly the [cryptocurrency] space is unfolding, given the breadth of opportunities in front of Coinbase, we feel very fortunate having someone like Emilie with us and helping us figure out how to get those deals done."

While the cryptocurrency industry is still in fledgling stages—Bitcoin, whose price currently hovers just below $11,500, was invented just over nine years ago—its explosive growth is already fueling mergers and acquisitions that could lead to greater consolidation. Just a week ago, Circle, a financial services firm specializing in Bitcoin trading, acquired Poloniex, a rival cryptocurrency exchange to Coinbase, for a price believed to be around $400 million, as Fortune first reported.

Coinbase is already eyeing "quite a number" of potential acquisitions, Hirji said, and Choi will be tasked with helping it evaluate those as well as identifying new targets. Deals could range from so-called acqui-hires—buying startups primarily to gain their employees—such as Coinbase did with Memo.AI in January, "all the way through to tuck in acquisitions in the middle, and large-scale acquisitions," Hirji explained.

"Emilie is going to super busy at day one. There’s at least half a dozen things she’s going to wade into right away," Hirji added.

The hire is another coup for Coinbase, which has rapidly been building out its executive team as the more than 5-year-old startup, now worth over $1 billion, attempts to fortify its reputation as one of few professional financial institutions catering to Bitcoin investors. In January, Coinbase also hired Tina Bhatnager as vice president of operations and technology, an executive who played a crucial role in the company's latest customer service crisis last month, when many Coinbase customers were double charged for Bitcoin transactions.

Choi compares the current opportunities in the cryptocurrency industry with those in front of Google in 2004, when the search giant bought what would become Google Maps. "There were just a bunch of really interesting startups that helped Google take things to the next level," she said. "So it feels like that kind of an atmosphere. We’re seeing so much, so many interesting startups and entrepreneurs in the space...and Coinbase wants to capitalize on that."

Added Hirji, "We’ve reached that point of maturity."

Still, Hirji said Coinbase's M&A strategy was not impacted by Circle's Poloniex acquisition, and cast off the idea that the deal could signal further shakeups among cryptocurrency exchanges. "I don’t view that as a harbinger of anything, frankly. I think the industry is still too nascent to even be talking about consolidation. I think it’s unclear how things are going to play out," Hirji said. "Whether a small exchange gets bought or not, it’s not that material to what we’re doing."

Rather, Coinbase is concentrating on launching new businesses it already has in development, which Choi is likely to bolster in her new role, Hirji added: "That’s what we’re maniacally focused on."

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