Ben Strack

<div id="highlights-block_61d6f110690a2" class="highlights">
 <ul>
 <li>“As a small firm, building a presence in an emerging area can be a tremendous competitive differentiator,” Architect Partners Managing Partner Eric Risley said</li>
 <li>The merge comes after crypto M&amp;A tripled and capital raise transactions nearly doubled from 2020 to 2021</li>
 </ul>
 
</div>



<a href="https://www.architectpartners.com" target="_blank" rel="noreferrer noopener">Architect Partners</a> is merging with crypto-native investment bank team <a href="https://emergents.co" target="_blank" rel="noreferrer noopener">Emergents</a> in an effort to become the go-to M&amp;A and financing advisory firm in the crypto space following a deal-filled year.



Architect Partners has delivered M&amp;A and strategic financing advisory services to entrepreneurs, public company senior executives and boards of directors since it was founded in 2010. The company tracks crypto mergers and acquisitions, private financings and public company valuation trends and publishes alerts on all announced transactions.



Emergents, founded in 2017, is an emerging technology investment bank team focused on crypto, blockchain and climate tech. It offers strategic advisory and capital raising services to innovators and entrepreneurs.



With the addition of the Emergents team, Architect Partner’s crypto unit is the largest group in the firm as measured by revenue and professionals, firm executives said.&nbsp;



Of the dozen or so employees at the company, about two-thirds are dedicated exclusively to the crypto space, Architect Partners Managing Partner Eric Risley told Blockworks.&nbsp;



“As a small firm, building a presence in an emerging area can be a tremendous competitive differentiator,” Risley explained. “When we started Architect Partners…it was really clear in my mind to focus and find our spot and be really deep and good at it.”



Emergents Managing Partner Elliot Chun said that Emergents has believed since 2019 that crypto, as an industry and an asset class, is positioned for transformational growth.&nbsp;



After the merge with Architect Partners, he added, the combined firm will better be able to connect with both crypto native firms, as well as traditional asset managers, corporations and other institutional investors transitioning to the space.



“That is where our teams can really fit today and going forward,” Chun noted in an interview with Blockworks.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“With all the tailwinds behind crypto, with all the tailwinds behind the various enterprise use cases that we’re seeing, it’s a great time to be making this move.”</blockquote>



<h3 class="wp-block-heading">Crypto M&amp;A activity accelerating</h3>



The merge, announced on Thursday, comes after crypto mergers and acquisitions accelerated in 2021 — tripling from 2020 levels, according to the firms, while capital raise transactions nearly doubled over that span.



One of the biggest deals of last year — excluding those involving special purpose acquisition companies (SPACs) — was <a href="https://cms.blockworks.co/galaxy-digital-acquires-bitgo-for-1-2b/">Galaxy Digital’s $1.2 billion purchase of BitGo</a>.



2021 also witnessed a new type of blockchain-based <a href="https://cms.blockworks.co/a-match-made-in-defi-rari-capital-and-fei-protocol-merge-to-feirari/" target="_blank" rel="noreferrer noopener">merger between DAOs</a>, one approved by governance token holders of Rari Capital (RGT) and Fei protocol (TRIBE).



Ryan McCulloch, an investment banking associate at Architect Partners, <a href="https://cms.blockworks.co/what-could-crypto-ma-look-like-in-2022/" target="_blank" rel="noreferrer noopener">previously told Blockworks</a> in an interview that he expects large financial companies to continue looking to buy crypto data providers, stablecoin issuers and digital asset firms focused on payments.



Chun highlighted the <a href="https://blog.hermez.io/polygon-hermez-merge/" target="_blank" rel="noreferrer noopener">merge of the Polygon and Hermez networks</a> last year, noting that he expects to see more of those types of deals in 2022.



Risley said Architect Partners plans to announce four closed crypto M&amp;A deals in the next six weeks, though he did not specify which companies were involved.



“Two of which are with the top one percent marquee names in the sector and all of which have massive strategic value,” he noted. “Most of the deals that we have within Architect Partners…are in the crypto sector, and we anticipate that will increasingly be the case and will become 100% at some point.”



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Strategic Advisory Firms Merge to Become Crypto Space’s Go-To M&A Specialists

<div id="highlights-block_617ac2d36c1e8" class="highlights">
 <ul>
 <li>Payments giant looks to offer “a safe space” for governments and private sector banks to figure out how a CBDC would work</li>
 <li>“We can’t run fast enough right now” into data privacy and authentication segment of crypto, Mastercard CEO says</li>
 </ul>
 
</div>



Mastercard is focused on facilitating crypto investments as well as readying its network for a central bank digital currency, CEO Michael Miebach said during the company’s third quarter earnings call on Thursday.



“We could not have an earnings call without talking about crypto,” Miebach said when asked about the space. “We see significant volumes in terms of people actually investing in crypto and selling crypto, so as an asset class there’s a lot going on, and I think we have a role to play to facilitate consumers wanting to do that.”



Mastercard most recently <a href="https://cms.blockworks.co/mastercard-to-offer-crypto-credit-debit-cards/" target="_blank" rel="noreferrer noopener">partnered with digital asset platform Bakkt</a> to make it easier for merchants, banks and fintechs in the US to embrace and offer cryptocurrency solutions and services. 



Miebach noted that the most likely chance for crypto to be used as a payment tool will be through a government-issued central bank digital currency. Mastercard will make its network ready to handle a CBDC if and when that happens, he added.&nbsp;



“How will a government test that? How will a country figure out between the private sector banks and the governments how to do this?” the CEO said. “That’s where our sandbox comes in; we can provide a safe space for governments and private sector banks to figure out how that would actually work.”



“Should there be a private sector stablecoin, we might also do that,” Miebach added, “but we have very strict principles on when to do this and when not.”



<h3 class="wp-block-heading">Recent acquisition will be key to company’s growth in crypto</h3>



Mastercard announced <a href="https://cms.blockworks.co/mastercard-to-acquire-crypto-intelligence-company-ciphertrace/" target="_blank" rel="noreferrer noopener">its plan to acquire</a> crypto intelligence company <a href="https://ciphertrace.com/about-us/" target="_blank" rel="noreferrer noopener">CipherTrace</a> in September. The firm previously said that the purchase would enhance its crypto capabilities for insight into more than 900 cryptocurrencies currently monitored by CipherTrace, which is funded by the US Department of Homeland Security.  



CipherTrace was founded in 2015 and has provided “blockchain forensics” for over 150 of the largest banks, exchanges, financial institutions and regulators across roughly 7,000 cryptocurrency entities.



Eric Risley, a managing partner at Architect Partners, <a href="https://cms.blockworks.co/are-tradfi-and-crypto-set-for-an-ma-explosion/" target="_blank" rel="noreferrer noopener">previously pointed</a> to Mastercard’s purchase of CipherTrace as the types of deals financial services incumbents will likely do to build their presence in crypto.



“What does CipherTrace actually do? They drive compliance and [anti-money laundering] checks into crypto transactions,” Miebach said during the earnings call. “We can’t run fast enough right now to get into this space, because a lot of other people are deep into crypto and these questions are not resolved.”