Kraken Parent Acquires Magic Labs’ Embedded Wallet Business in Latest Crypto Consolidation Move

The wallet infrastructure layer is being reshaped as large exchanges buy up the technology that could define user onboarding for the next cycle. Kraken parent company Payward has completed an asset purchase of Magic Labs’ embedded wallet business, moving the team and product into Payward Services while Magic Labs itself rebrands to Newton Labs and shifts focus entirely to the Newton Protocol, according to the original report. Financial terms of the deal were not disclosed. Embedded wallet solutions allow users to interact with blockchain applications without managing separate seed phrases or external wallet software, and they have become a key battleground for exchanges looking to reduce friction. Magic Labs had raised more than $80 million in venture funding, including a $52 million round led by PayPal Ventures in 2023, to build precisely that kind of infrastructure. The acquisition hands Payward a ready-made team and technology stack that can accelerate Kraken’s own non-custodial product roadmap at a time when Web3 applications are demanding more seamless user experiences. Kraken’s Steady Push Into Wallet Technology Kraken has been gradually expanding its wallet capabilities beyond its core 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 Payward is not content to rely solely on in-house development. Instead, it appears to be buying expertise and intellectual property that can help it compete with other major platforms that have already built comprehensive wallet ecosystems. The embedded wallet model is particularly attractive because it lets apps and services create wallet-like functionality without forcing users to exit the platform. That matters for institutional clients, gaming platforms, and any developer building consumer-facing crypto products. For Kraken, owning that layer could tighten its integration with decentralized finance protocols and NFT marketplaces, both of which demand smooth onboarding. The broader context is that exchanges are no longer just trading venues; they are becoming full-stack infrastructure providers. Magic Labs Becomes Newton Labs Magic Labs will now operate as Newton Labs and concentrate on the Newton Protocol, a project that has been largely separate from the wallet business. The move effectively splits the company in two directions: one part absorbed into a large exchange group, the other chasing a protocol-level play. The decision to sell the wallet unit rather than continue running it suggests the leadership saw a better risk-adjusted path in focusing on core protocol development, especially after raising substantial external capital. What the Newton Protocol aims to achieve is not detailed in the disclosed material, but a protocol pivot often signals a belief that the underlying technology can generate more value as a standalone network or infrastructure layer rather than as a service business.