Sep Alavi

Visa is in late-stage talks to buy Fireblocks for ~$2.5bn (Axios) That is roughly 70% below the $8bn valuation Fireblocks raised at in 2022. Fireblocks runs custody and wallet infrastructure for 2,400+ institutions, including BNY Mellon and BNP Paribas, and says it has secured over $10tn in transfers. It has become the biggest player in digital asset custody. But increasingly it's expanding in more directions and product cross-sell, while underneath, competitors like DFNS are winning market share and mind share. Fireblocks hasn't raised in a while. Visa's stablecoin settlement crossed a $20bn annualized run rate in September, up 15x in a year, with 160+ stablecoin-linked card programs live. They're arguably ahead on stablecoin-linked cards. Then Mastercard bought BVNK, Visa's settlement and OTC partner. While Fireblocks isn't a like-for-like (Visa now partners with many in that space), it does take custody, arguably a harder piece to do in-house. And the strategy here is fascinating to observe To my mind, Visa wants to be the provider of choice for any FI going onchain, especially the big banks. Fireblocks is a large book of enterprise clients and fits exactly where I think Visa is going. Cards are where stablecoins drive Visa today. As settlement for non-card payments starts to go onchain, Visa needs the wallet and custody plumbing underneath those flows. Fireblocks then looks like a logical play. Visa gets the enterprise relationships and the plumbing in one deal. Fireblocks customers now have a custody vendor owned by a card network, and some exchanges and Mastercard-aligned banks will think twice. DFNS and the rest now compete with a vendor that has Visa's sales team already inside the big banks. It reminds me that Standard Chartered also said it would take full ownership of Zodia Custody. Digital asset custody is consolidating into the incumbents. Visa paid $2bn for CyberSource in 2010 to own the e-commerce gateway. (Arguably no longer *the default* gateway, but certainly one that's very successful at least in part due to Visa's market distribution). This is that play for onchain. For Fireblocks, this is a down round and a half if it happens. But not dissimilar from what we've seen in SaaS with bending spoons. A lot of companies got bid up high in the 2021 era, and no matter how successful and how much revenue they pile on, it's still big shoes to fill. Fireblocks is a talent team, so I wish them well if this is true or not. Either way. Keep doing things. Visa and Fireblocks both sponsor tokenized, but as you'd hopefully imagine, I have no insight or color on this from either team and haven't spoken to anyone there about it.