Mastercard's $2 billion acquisition of Zerohash falls through, plans to shift towards strategic investment

Mastercard’s $2 billion acquisition negotiations for Zerohash have fallen through, with Zerohash choosing to remain independent. Sources familiar with the matter reveal that Mastercard is now considering strategic investments. Zerohash completed a $104 million funding round last year, with a valuation of $1 billion. Its clients include Interactive Brokers, Stripe, BlackRock, and others, serving over 5 million users across 190 countries.

Inside the $2 Billion Acquisition Breakdown

In October, Fortune magazine reported that Mastercard had entered the final negotiation stage to acquire Zerohash, potentially paying up to $2 billion. Zerohash provides custody, settlement, and fiat access channels, enabling fintech companies and brokerages to offer digital asset services without building infrastructure themselves. This “Infrastructure-as-a-Service” business model allows traditional financial institutions to quickly enter the crypto market without bearing the heavy burdens of regulation and technical development.

However, according to three individuals who requested anonymity due to confidentiality, the negotiations have concluded. Mastercard declined to comment, but two of these sources indicated that discussions about investment are still ongoing. This strategic shift from acquisition to investment reflects possible disagreements over control and valuation.

The core reason for the acquisition falling through is Zerohash’s insistence on remaining independent. A Zerohash spokesperson explicitly stated via email: “We are not considering being acquired by Mastercard. We respect the Mastercard team and look forward to expanding our business collaboration. Our team is at the heart of our growth, and we believe maintaining independent operations is most beneficial for Zerohash to continue innovating, building products, and serving our customers.”

This statement reveals several key messages. First, Zerohash believes independence is fundamental to its innovative capacity; being acquired by a large traditional financial institution could weaken its agility and technological edge. Second, Zerohash is open to business cooperation with Mastercard, paving the way for a shift from acquisition to strategic investment. Third, the company emphasizes the importance of its team, hinting that an acquisition might lead to talent loss— a common issue faced by startups post-acquisition.

From a valuation perspective, a $2 billion price tag represents a 100% premium over Zerohash’s valuation of $1 billion last October. While this is substantial for a company only 7 years old, Zerohash’s management evidently believes its future growth potential far exceeds this figure. With the rapid expansion of cryptocurrency and stablecoin applications, Zerohash, as an infrastructure provider at the core of the industry value chain, has significant upside potential.

Why Zerohash Chooses to Remain Independent

Founded in 2017, Zerohash offers APIs and embeddable developer tools that enable financial institutions and fintech firms to integrate cryptocurrency, stablecoins, and tokenization services into their products. Its platform serves clients including Interactive Brokers, Stripe, BUIDL Fund (a BlackRock subsidiary), Franklin D. Roosevelt & D. Partners, and DraftKings, with over 5 million users across 190 countries.

This client list reveals Zerohash’s core competitive advantage. Interactive Brokers is one of the world’s largest online brokerages; Stripe is a payments giant; BlackRock is the world’s largest asset manager; Franklin D. Roosevelt & D. Partners is a traditional legacy fund. These clients span brokerage, payments, asset management, and entertainment industries, demonstrating Zerohash’s broad applicability of its technology solutions.

Last October, Zerohash completed a Series D funding round led by Interactive Brokers, raising $104 million, with a valuation of $1 billion, officially entering unicorn territory. New participants included Morgan Stanley, Apollo-managed funds, SoFi, Jump Crypto, Northwest Mutual Future Ventures, FTMO, IMC, Liberty City Ventures, along with existing investors PEAK6, tastytrade, and Nyca Partners.

This investor roster itself functions as an industry map. Morgan Stanley and Apollo represent traditional finance recognition; SoFi signifies emerging fintech support; Jump Crypto and IMC bring expertise in crypto-native and high-frequency trading. This diversified investor base provides Zerohash with abundant resources and networks, explaining why the company feels confident rejecting Mastercard’s acquisition offer.

Another key reason for remaining independent is market timing. Currently, the crypto industry is transitioning from speculation to application, with rapid growth in stablecoin payments, tokenized assets, and institutional custody needs. As an infrastructure provider, Zerohash is at the forefront of this trend, with its revenue and client base poised for exponential growth in the coming years. In this context, an early acquisition could mean missing out on larger valuation appreciation.

From Acquisition to Strategic Investment: A New Model

Although the acquisition negotiations have failed, sources indicate that Mastercard is considering a strategic investment in Zerohash. This shift from acquisition to investment is not uncommon in tech M&A but holds particular significance in the crypto space.

Strategic investments benefit both parties. For Mastercard, investing in Zerohash provides deep access to crypto infrastructure while avoiding the integration risks and regulatory scrutiny associated with full acquisition. As the second-largest global payment network, Mastercard’s core business is traditional payment processing; acquiring a crypto company outright could trigger regulatory concerns over market monopoly and systemic risks. In contrast, a strategic investment offers a more flexible way to participate.

For Zerohash, accepting Mastercard’s investment means gaining capital support and business networks while maintaining operational independence. Mastercard’s extensive merchant network and global payment infrastructure are highly valuable for Zerohash’s market expansion. Through strategic cooperation, Zerohash can embed its crypto infrastructure into Mastercard’s payment ecosystem, reaching millions of merchants and billions of consumers.

This model also reflects a strategic evolution for traditional financial institutions entering the crypto market. Early on, many banks and payment firms were resistant to cryptocurrencies. As the market matures, they have attempted to build crypto services internally but soon found the technical and regulatory hurdles daunting. The current trend favors acquiring or investing in specialized companies to quickly gain capabilities, with strategic investments offering a lower-risk testing ground.

The Rise of Crypto Infrastructure M&A

M&A activity in the crypto sector is becoming increasingly active. Last week, CoinDesk reported that crypto data platform CoinGecko is seeking buyers, with an estimated valuation of around $500 million. As M&A transactions return to the industry stage, the most attractive targets are no longer speculative deals but mature infrastructure projects with established revenue streams and regulatory foundations.

Potential targets include licensed exchanges and brokerages offering real-time market access, custody and staking providers with institutional clients, and high-margin data and compliance firms. These categories share common features: stable cash flow, clear business models, established customer relationships, and relatively low regulatory risk. In contrast, DeFi protocols and emerging blockchains, while technologically innovative, have high business model uncertainty and ambiguous regulatory outlooks, making them less attractive to traditional acquirers.

Mastercard’s interest in digital asset acquisitions also relates to other potential targets. According to Fortune magazine’s October report, both the largest compliant crypto exchange in the US and Mastercard have considered acquiring London-based fintech BVNK, which is building stablecoin payment infrastructure. This indicates Mastercard’s systematic evaluation of multiple targets in crypto, aiming to establish strategic positions in stablecoin payments and crypto infrastructure.