Stripe Acquires Crypto Wallet Infrastructure Company Privy

On June 12, American payment processor Stripe announced its acquisition of the crypto wallet infrastructure company Privy, which will be integrated into Stripe but will continue to operate as an independent product.

American payment processor Stripe has announced the acquisition of crypto wallet infrastructure company Privy, which will be integrated into Stripe but will continue to operate as an independent product. The acquisition is expected to be completed in the coming weeks, with specific deal terms not yet disclosed.

Privy's embedded wallet allows developers to create a simpler onboarding experience, such as enabling users to create a crypto wallet without having to remember or write down a seed phrase. Additionally, Privy allows users to hold assets or perform actions directly within supported crypto applications without needing to connect to third-party wallets like MetaMask for transactions. For example, OpenSea uses Privy to enable customers to purchase NFTs directly from its platform. Privy creates a wallet for consumers in the background, making it easier for them to make purchases.

Prior to this collaboration, OpenSea customers had to create an external wallet through providers like MetaMask or Coinbase Wallet and link it to their accounts.

"When we first started, wallets were powerful, but only technically skilled individuals could use them. Developers had to guide users outside the platform to get started, which disrupted the user flow and limited user conversion. This friction fundamentally limited the future development of the crypto space," said Henri Stern, co-founder and CEO of Privy, in a press release.

New York-based Privy was co-founded by Stern and Asta Li, who was a founding engineer at Aurora before starting Privy. Stern previously worked as a researcher at Web3 company Protocol Labs. The startup was founded in 2021 and recently raised $15 million in a funding round led by Ribbit Capital, bringing its total funding to over $40 million. Other investors include Sequoia Capital, Paradigm, BlueYard, and Coinbase Ventures. According to Pitchbook data, Privy's latest valuation in March of this year was $230 million.

Privy claims that within three years, its technology has been widely adopted across the industry, supporting over 75 million accounts and 1,000 development teams, including mainstream crypto applications like Pump.fun, Hyperliquid, and OpenSea, as well as restaurant loyalty program startup Blackbird and global recruitment company Toku.

"By connecting Privy's wallet with the funding flow capabilities of Stripe and Bridge on a unified platform, we are excited to enable a new generation of global internet-native financial services," said Patrick Collison, co-founder and CEO of Stripe.

Stripe's crypto journey began in 2014. Stripe was one of the first payment companies to accept Bitcoin in 2014, but it halted this service in 2018 due to scalability issues and high transaction fees. However, the company stated at the time that it was "very optimistic about the overall prospects of cryptocurrency."

Stablecoins are Stripe's next attempt. In April of this year, the company announced that it would support stablecoin USDC payments this summer. Then in October, Stripe launched a public beta feature called "Pay with Crypto," allowing U.S. businesses to accept stablecoin payments and automatically convert them to fiat currency deposited into their Stripe accounts. Supported stablecoins include USDC and USDP, covering Ethereum, Solana, and Polygon chains. In the first week of launching stablecoin payments, Stripe's transaction volume exceeded its entire history of Bitcoin transactions.

However, Stripe lacked a key component, needing a seamless way to handle cross-border transactions. In November of last year, Stripe confirmed its acquisition of the stablecoin payment platform Bridge for $1.1 billion, a deal that was ultimately completed in February of this year. This is Stripe's largest acquisition to date, marking a significant move in the stablecoin space. The acquisition of Bridge allows it to expand its stablecoin payment infrastructure and cross-border payment solutions.

In May of this year, Stripe launched stablecoin accounts in over 100 countries/regions, aiming to help merchants hold funds and make payments to overseas suppliers using USDC from Circle Internet Group Inc. and USDB stablecoin issued by Bridge.

A series of actions by Stripe indicate that the company intends to become the preferred provider for those looking to increase support for crypto products or launch their own crypto products, as companies ranging from large tech firms to traditional banks are showing strong interest in exploring crypto technology.