Kraken parent company Payward has completed an asset purchase of Magic Labs’ embedded wallet business. The team and product will move into Payward Services, while Magic Labs rebrands to Newton Labs and focuses entirely on the Newton Protocol, according to the original report. Financial terms were not disclosed.
Embedded wallets let users interact with blockchain applications without managing separate seed phrases or external wallet software. They have become a key area of competition for exchanges seeking to simplify onboarding. Magic Labs raised more than $80 million in venture funding, including a $52 million round led by PayPal Ventures in 2023, to develop this infrastructure.
The acquisition gives Payward an established team and technology stack. It could also speed up Kraken’s non-custodial product roadmap as Web3 applications demand more seamless user experiences.
Kraken’s Steady Push Into Wallet Technology
Kraken has expanded its wallet capabilities beyond its custodial exchange. In recent years, the company launched Kraken Wallet, a self-custody mobile application that supports multiple chains.
The purchase of Magic Labs’ embedded wallet business suggests that Payward is looking beyond in-house development. It is acquiring expertise and intellectual property that could help it compete with major platforms that already offer broad wallet ecosystems.
The embedded wallet model lets apps and services add wallet functionality without requiring users to leave the platform. That matters for institutional clients, gaming platforms, and developers building consumer-facing crypto products.
For Kraken, owning this layer could strengthen its integration with decentralized finance protocols and NFT marketplaces. Both require a simple onboarding process. Exchanges are also expanding beyond trading and becoming infrastructure providers.
Magic Labs Becomes Newton Labs
Magic Labs will now operate as Newton Labs and focus on the Newton Protocol. The project has been largely separate from the wallet business.
The change splits the company in two directions. One part will join a large exchange group, while the other pursues a protocol-level project. Selling the wallet unit instead of continuing to operate it suggests that the leadership saw a better risk-adjusted path in focusing on protocol development, especially after raising substantial external capital.
The disclosed material does not detail what the Newton Protocol aims to achieve. A protocol pivot can indicate that a company believes its technology could create more value as a standalone network or infrastructure layer than as a service business.
The rebrand removes the old association and closes the wallet chapter. For venture backers such as PayPal Ventures, the move may represent a partial exit from one business line while preserving exposure to a potentially larger protocol opportunity.
Infrastructure Deals Keep Flowing
The transaction follows a broader pattern of crypto firms acquiring smaller infrastructure businesses. Exchanges, custodians, and fintech companies have been buying wallet providers, staking services, and data analytics firms as the industry matures.
High-profile consolidation moves like Bullish acquiring Equiniti for $4.2 billion show that infrastructure deals extend beyond startups. Even when prices are undisclosed, these transactions often reflect a desire to own more of the stack and reduce reliance on third-party services.
For Payward, adding an embedded wallet business could also provide protection against regulatory pressure on custodial models. If regulators require stricter separation of customer funds or promote non-custodial alternatives, a mature embedded wallet offering could become a competitive advantage.
The acquisition could also strengthen relationships with developers building applications that rely on Kraken’s wallet infrastructure. That approach mirrors strategies already visible in ecosystems with high developer activity.
The price Payward paid and the exact structure of the deal remain undisclosed. Without that information, it is difficult to determine how much value Magic Labs’ investors realized from the wallet business and how much they are retaining through the Newton Protocol.
The separation also raises questions about whether the embedded wallet team will operate independently inside Payward Services or merge into Kraken’s existing product units. The speed at which Payward integrates the technology into Kraken’s retail and institutional products will provide a key market signal. The acquisition adds to evidence that crypto companies are competing more aggressively to control wallet infrastructure.
