Kraken Parent Payward Acquires Magic Labs' Wallet Business

Payward, the parent company of crypto exchange Kraken, has agreed to acquire the wallet business of Magic Labs and fold its non-custodial wallet technology into its own B2B platform, Payward Services. Magic Labs' infrastructure already powers more than 60 million wallets for 200,000 developers, with over $10 billion in stablecoin transactions processed through it.

For the industry, this is another sign that wallet infrastructure has stopped being a side feature. Large exchanges now treat it as a standalone business line with its own revenue, and Payward is joining that group.

Kraken is the retail exchange most traders know. Payward is the parent structure that separately runs the B2B side for business clients, namely banks, fintech companies and apps that work with crypto. That is the division through which the Magic Labs deal runs.

What exactly Payward is buying

The companies confirmed the deal on Monday, July 27. Payward Services, the unit serving business clients with trading, custody, tokenized assets and fiat on- and off-ramps, will gain Magic Labs' embedded wallet technology. According to Cointelegraph, the financial terms were not disclosed, and the deal is expected to close in the coming weeks subject to customary closing conditions.

This is not a retail product. Payward Services sells infrastructure to other companies, not to individual traders. Before the deal, the company already offered business clients access to trading and custody; the package now gains the ability to issue end users their own wallets without a separate contractor.

60 million wallets and $10 billion in stablecoins

Magic Labs built non-custodial wallets that embed directly into client apps, removing the need to plug in a separate wallet provider. The company says its infrastructure has created more than 60 million wallets for over 200,000 developers.

Divide $10 billion in volume by the wallet count and the average turnover works out to roughly $167 per wallet. That is a small figure, and it points to a mass-market user base. The technology looks built for everyday payments rather than storing large sums.

200,000 developers on a single wallet infrastructure is a scale comparable to the cloud APIs of large fintech companies. That base size is exactly what turns the technology into an asset worth buying rather than something a rival could copy in a few months of development.

The non-custodial label means the wallet's private keys stay with the user, not on the company's servers. After the deal, Payward will be able to issue clients wallets that even the exchange itself cannot access, unlike traditional custodial storage where the company holds the keys.

A classic crypto wallet is something a user installs and sets up on their own, separate from any app. An embedded wallet instead appears right inside a service the person already uses, a fintech app, a game or a trading platform, with no need to visit a separate site or install a browser extension.

For a business, that difference matters a lot. Instead of explaining to new users what a seed phrase or private key is, the company issues a wallet automatically at signup. That lowers the barrier to entry, but it also shifts the burden of securing the infrastructure onto the company, which is exactly why such technology gets bought from a proven vendor rather than built from scratch.

Another advantage of embedded wallets for a business is speed to launch. A company gets ready-made infrastructure for key storage and transaction signing instead of spending months auditing its own security code. That matters especially for stablecoin payments, where clients expect instant confirmation rather than delays from manual wallet checks.

Why Kraken wants its own wallet technology

Payward Services competes for corporate clients who want trading, custody and exchange of assets like Bitcoin or Ethereum bundled into one contract. Embedded wallet technology closes another gap for business clients, who will be able to issue self-custody wallets directly inside their own apps without integrating a separate outside provider.

It is a familiar infrastructure consolidation move. Instead of partnering with an outside wallet provider, the company buys the technology and controls the whole stack, namely custody, trading, stablecoin settlement and now wallet issuance for users.

The approach also simplifies sales. Instead of offering a client three separate contracts with three vendors, Payward can close the entire infrastructure need with one agreement, which directly affects how fast new business clients sign on.

Tokenized assets, another line of Payward Services, also benefit from owning wallet infrastructure. Companies issuing tokenized bonds or shares need a way to give clients a wallet for holding those tokens right at signup, instead of sending them off to install a separate extension.

What happens to Magic Labs after the sale

After selling its wallet division, Magic Labs will focus on a different product, a platform called Newton. It verifies and authorizes onchain transactions without centralized intermediaries. The company is giving up wallet infrastructure but keeping its transaction verification technology.

• Magic Labs' existing clients will need to migrate to Payward's infrastructure during a transition period.
• Regulatory wrinkle: custodial and non-custodial products under one roof can fall under different oversight regimes depending on the jurisdiction.
• Merging two technology teams rarely goes without delays for developers already plugged into Magic Labs.
• Part of the Magic Labs team will likely move with the business, as is typical when a technology startup's unit is acquired.

Deals like this in crypto infrastructure typically close in weeks rather than months, precisely because they involve technology and a team rather than a regulated financial business with its own license.

The wallet-as-a-service market is growing alongside stablecoins

The deal confirms a trend that took shape last year: large exchanges no longer want to depend on outside wallet providers for corporate clients, and they are buying ready-made technology instead of building it themselves. For stablecoins such as USDT, this shows up clearly. The $10 billion in volume through Magic Labs shows that businesses already rely on embedded wallets specifically for stablecoin settlement, not just for holding coins.

For regulators, embedded wallets also raise a new question. Who is responsible for anti-money-laundering compliance when a wallet technically belongs to the user but was issued by a business through an outside technology vendor? Payward will now have to answer that question on its own, since it controls the entire chain.

Retail users still pick their own crypto wallets rather than getting one bundled from an exchange. The corporate and retail wallet markets are moving on separate tracks, and Payward's deal belongs to the first one.

For someone who simply wants to trade a coin for cash or another currency, this deal changes little directly. It does show, though, that the infrastructure sitting behind exchanges and exchangers keeps getting more complex and more expensive to build each year.

Bottom line: wallet infrastructure consolidation keeps going

The Payward-Magic Labs deal will not move crypto prices directly, but it shows where the infrastructure market is heading. Large players are pulling custody, trading and wallet issuance under one roof. The likely next step, within the coming months, is similar acquisitions by other large exchanges also building B2B platforms for business clients.

In short, the bar for entering the enterprise crypto infrastructure segment keeps rising, and the number of independent players able to build that stack on their own keeps shrinking.