CMC Markets Wrote Off £2.8M Investment in Blockchain Firm Strike X

CMC Markets (LON: CMCX), known for its CFD offerings, has written off its £2.8 million investment in Strike X, a customer-centric blockchain solutions business it acquired in June 2023.

CMC’s Failed Entry into Blockchain

The London-headquartered CFDs broker holds a 33% stake in Strike X Technologies, which, at the time of the investment, marked its entrance into the blockchain space. However, the broker has now concluded that the investment amount is not recoverable, writing off the full carrying value.

The broker also noted that Strike X is actively seeking third-party capital through one of its subsidiaries to improve its financial position. It added: “Despite the impairment, the Group continues to support Strike X and its strategic objectives.”

"At CMC Markets, we are proud to partner with StrikeX, a dynamic and innovative leader in blockchain technology. We believe strongly in their vision and the transformative potential of their solutions, including advancements in self-custody, tokenisation, and blockchain infrastructure through StrikeX Labs," CMC wrote in a statement published today (Friday), adding that "The write-off of our initial investment is purely an accounting decision and does not reflect our belief in StrikeX's technology or potential, nor does it indicate any change in our partnership."

"On the contrary, we continue to integrate StrikeX's services into our offerings and see our relationship deepening further as we collaborate on Web 3.0 developments. The team at StrikeX has made tremendous strides in this fast-paced industry, and we remain excited to grow alongside them, supporting their mission to reshape the future of finance."

B2B Revenue from Revolut Is “Not Significant”

CMC Markets further confirmed it has begun onboarding clients through its partnership with Revolut, which was established last June. Revolut’s CFD clients are being onboarded onto its new platform, Revolut Invest, which has been launched in three European countries: the Czech Republic, Denmark, and Greece.

However, the brokerage also highlighted that the impact of the Revolut deal on its B2B revenue is “not significant” due to limited geographical coverage. Nonetheless, the British fintech firm plans to expand its CFD offerings across the European Union and has obtained a new UK licence to offer financial derivatives.

“This partnership presents an exciting opportunity for future revenue growth,” added CMC, “as well as increased operational leverage given the limited incremental costs required to service these customers.”

Finance Magnates earlier discussed with two CMC executives how the Revolut deal materialised.

According to its latest financials, CMC Markets generated £177.4 million in revenue between April and September, representing a yearly gain of 45% but a decline of 15.6% compared to the previous six months.

Despite CMC’s dominance in the retail space, it is now significantly strengthening its B2B presence. In the first six months of the current fiscal year, B2B services contributed 28% of its trading volume, compared to 31% and 35% in the two halves of the previous fiscal year.