Kraken to Buy Magic Labs’ Wallet Business as Exchanges Push Deeper Onchain

Kraken’s onchain push

According to the announcement described in the source article, the acquisition is aimed at helping Kraken bring onchain markets more directly into its main app. Rather than sending users to an external wallet whenever they want to interact with blockchain-based assets, the company would be able to integrate that wallet layer into its existing product.

Kraken already offers access to onchain tokens without requiring users to open a separate wallet. It also operates xStocks, its tokenized equities product, which the source article said has surpassed $35 billion in cumulative trading volume. Alongside that, Kraken runs Ink, an Ethereum layer-2 network that, according to the source, has not yet achieved breakout traction.

With Magic’s embedded wallet technology, those pieces could be tied together more tightly. The reported logic is that users could move between Kraken’s exchange environment, onchain markets, and tokenized products with less friction, while Ink could gain a more direct route into Kraken’s established user distribution.

Race to become the main venue

The deal sits within a broader contest among Coinbase, Robinhood, and Kraken. The source article said all three are trying to become the primary account where customers can trade a wide range of assets, including spot crypto, onchain assets, stocks, derivatives, payments, and tokenized securities.

At the same time, each company is building its own blockchain-based trading environment. The article points to Base from Coinbase, Robinhood Chain, and Kraken’s Ink as parallel efforts to make onchain and offchain trading feel like parts of the same venue rather than separate systems.

That competitive landscape remains unsettled. The source article noted that Robinhood Chain launched on July 1 and, within three weeks, overtook Base on daily active users. It added that Base still remains larger on deeper measures such as liquidity and stablecoin supply. In the source’s framing, Robinhood’s rapid rise illustrates how quickly a platform with strong existing distribution can turn that reach into an onchain market.

A period of shutdowns and acquisitions

Kraken’s move was reported during a month that also saw significant distress elsewhere in the sector. The source article said three crypto companies filed for Chapter 11 during the month, while two exchanges announced they were winding down.

At the same time, several larger firms were expanding. The article grouped Kraken’s agreement with acquisition activity by MoonPay and Circle, arguing that established companies are buying infrastructure around their core businesses as the market structure is still being decided.

In that reading, acquisitions in crypto are not only about improving margins in a mature industry. They are also about ensuring that a company remains relevant across several possible outcomes, including which trading venue becomes dominant, which blockchain settles the most value, and which digital dollar becomes the preferred standard.

Why the wallet layer matters

For Kraken, the wallet business appears to be a strategic layer rather than a standalone add-on. Embedded wallet infrastructure can reduce user friction at the point where centralized exchange activity meets blockchain-based trading. If successful, that would support Kraken’s effort to present crypto trading, tokenized equities, and activity on Ink as parts of one continuous product.

The source article’s broader conclusion was that as more infrastructure becomes widely accessible, the competitive edge shifts toward companies that can package those tools into a smoother product and a stronger network. Kraken’s agreement to buy Magic Labs’ wallet-as-a-service unit fits that pattern: it is less about owning a wallet for its own sake than about making Kraken’s broader trading ecosystem work as a single destination across onchain and offchain markets.