Farley predicts brutal shakeout as crypto firms face merge-or-die moment

The digital currency sector is heading towards a significant period of mergers and acquisitions, according to Tom Farley, who leads Bullish and previously ran the New York Stock Exchange.

Speaking on CNBC Friday, Farley said too many crypto firms are discovering a hard truth: what they built is a product, not a real business.

Farley knows something about industry shakeups. During his time running the NYSE until 2018, he watched the exchange business go through massive consolidation. Now he thinks something is similar is going to happen.

“The same thing is going to happen starting right now in crypto,” he told the network.

Market downturn exposes weak business models

The recent market downturn is exposing weak business models. Bitcoin has fallen roughly 45% from its peak of $126,100 in October and was trading at $69,405 when Farley gave his interview. He said the price drop is washing away the “false optimism” that let weak companies survive with inflated price tags. While people often panic during these corrections, Farley believes this is actually when the best long-term choices get made.

The problem, according to Farley, is that this cleanup should have started much earlier.

“It should have happened a year or two ago,” he explained. Companies kept hoping they could still fetch the kind of valuations seen in 2020, even when their numbers didn’t support it.

He gave an example of firms bringing in just $10 million in revenue with no growth who still wanted $200 million to sell.

“That dream is going to be over,” Farley said. “People are going to realize they don’t have businesses, they have products, and they need to merge up, and they need to scale, and that is going to happen.”

Institutional approach replaces speculative era

According to Farley, the industry is moving away from “chasing frog coins and 100x leverage” and toward “on-chain” finance. The fundamental premise is that significant financial assets will eventually be transferred to public blockchains. Because they are looking five to ten years ahead and are not responding to daily movements, large institutional players continue to be engaged despite dramatic price changes. The process of consolidation will not be simple.

Larger initiatives will acquire smaller ones, typically resulting in internal reorganizations and job losses. The businesses that come out of this phase, however, need to be more equipped to handle the high trading volumes that institutions demand and adhere to stringent regulatory requirements.

Farley said that surviving companies need to stop being just “features” and become “institutional, compliant, and respected.” The difference between having a speculative product and running a sustainable business will determine who gets bought and who does the buying. There are signs the underlying technology has staying power.

Even traditional firms like the NYSE have shown interest in putting stocks on blockchain systems, which Farley sees as proof that the technology works even if individual projects fail. This institutional endorsement suggests that while individual tokens may fluctuate, the infrastructure itself is becoming an undeniable fixture of modern global finance.

The current market is acting like a filter. As investors become pickier about where they put money, only companies that can prove they are built for the long haul will attract buyers or survive on their own. The result will likely be a crypto industry that looks more like traditional finance, with a handful of large, heavily regulated companies providing most of the infrastructure.

For firms that can adapt and grow during this transition, the consolidation wave offers a chance to become legitimate long-term players in what Farley sees as an increasingly professional global market. The wild west days appear to be ending, replaced by a more mature phase where size, compliance, and institutional backing matter more than hype.

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