(Bloomberg) -- Digital-asset trading and brokerage firm FalconX is hunting for acquisitions ahead of an anticipated flurry of deal-making in the sector.

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Raghu Yarlagadda, FalconX’s co-founder and chief executive, expects the cost of doing business in crypto to rise as more institutional players enter the market and regulations tighten. That in turn will trigger a “wave of consolidation” in 2025, he said in an interview.

“Currently, we are actively exploring potential acquisitions and assessing the relevant sectors and key players within them,” Yarlagadda added.

Acquisitions have been relatively scarce in the digital-asset industry despite the $100 billion that has been invested in the sector’s startups to date. A handful of smaller deals have bucked the trend this year, however, including Robinhood Markets’ $200 million swoop for Bitstamp, the exchange, and Zodia Markets’ purchase of Elwood Capital Management.

Overall crypto M&A activity and value fell in the third quarter after an uptick in the previous three months, according to a recent report from Architect Partners, the deals advisory firm.

FalconX has witnessed a significant rise in potential acquisition opportunities, a spokesperson for the company said. The firm is looking to buy high quality, smaller companies focused on institutional infrastructure, data and analytics, tokenization and expanding its trading teams in 2025, they added.

Founded in 2018, the San Mateo, California-based company was last valued at $8 billion in a $150 million round in 2022. It’s backed by investors including Tiger Global, GIC and B Capital and has garnered over 600 institutional customers, according to its website.

FalconX’s revenues hit a record level in the second quarter, jumping 2.5 times compared with the same period last year. Derivatives trading revenues rose nearly 3 times, the firm’s spokesperson said. They declined to share exact figures.

While mostly starved of payouts in the form of trade sales or listings, crypto venture investors also had to stomach a string of failures after a disastrous 2022 punctuated by the collapse of TerraUSD, the ill-fated stablecoin, and Sam Bankman-Fried’s crypto empire. Venture capital flows into the industry remain suppressed relative to a few years ago.

Yarlagadda said survivors of the 2022 rout emerged “leaner, faster and stronger,” adding that the company’s strong second quarter provides “a good war chest” as it scouts for acquisition targets in the coming year.

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