CoinDesk
Payward, the parent company of crypto exchange Kraken, reported a 12% year-over-year decline in its preferred revenue measure, with total platform margin falling to $487 million in the third quarter as subdued trading weighed on fees. The metric, which replaces adjusted revenue, deducts staking rewards paid to clients and trading costs.
The quarter was not uniformly soft. Total platform margin rose 12% from the second quarter, and adjusted earnings improved as trading activity picked up and income from client assets and services grew, though both remain well below year-earlier levels.
Why it matters
The headline number matters less than its composition. Income tied to client assets and access to products, data and services climbed to 52% of the total, up from 46% a year earlier, evidence that Payward's push beyond pure trading fees is doing exactly what it was designed to do: cushion the business when volumes dry up.
The company now spans trading, banking, asset management and infrastructure through Payward Services, and recently added artificial intelligence as a fifth business pillar, including plans for a personal finance agent and investment funds built on its xStocks tokenized equities platform. In November, a Payward-affiliated fund and its clients bought an undisclosed amount of AAVE tokens through secondary-market purchases as the company explored deeper collaboration with the decentralized lender.
Market impact
The diversification strategy also reaches into traditional finance. Payward has held talks with Wells Fargo about supplying liquidity for crypto trading, and separately discussed a financial-infrastructure partnership with BNY that could span digital assets, custody, wealth management, trading and payments.
If the second-quarter rebound holds, the story shifts from revenue decline to revenue mix: a Kraken that earns the majority of its margin from services rather than trading fees is structurally less exposed to crypto's cyclicality, and closer to the traditional financial-services model its bank partnerships are built around.
Frequently asked questions
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How much did Kraken parent Payward's revenue fall in the third quarter?
Payward's preferred revenue measure, total platform margin, fell 12% from a year earlier to $487 million, as subdued trading activity weighed on fees. The figure still rose 12% from the second quarter.
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What portion of Kraken's revenue now comes from non-trading services?
Income tied to client assets and access to products, data and services reached 52% of total platform margin in the third quarter, up from 46% a year earlier, reflecting Payward's expansion beyond crypto trading fees.
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What is Kraken's xStocks platform?
xStocks is Payward's tokenized equities platform. The company plans to build investment funds on it and is developing a personal finance agent as part of a newly added artificial intelligence business pillar.
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Which banks has Kraken's parent company partnered with?
Payward has held talks with Wells Fargo about supplying liquidity for crypto trading and separately discussed a financial-infrastructure partnership with BNY spanning digital assets, custody, wealth management, trading and payments.
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Why did Payward buy AAVE tokens?
In November, a Payward-affiliated fund and its clients purchased an undisclosed amount of AAVE tokens through secondary-market purchases as Payward and the decentralized lender Aave explored opportunities for further collaboration.
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