Despite the number of deals dropped, in the first half of this year, total global investments in blockchain and cryptoassets more than doubled the amount injected in these industries in the whole of 2020, reaching USD 8.7bn and soaring past the previous annual record posted in 2018, at USD 7.2bn, according to international consultancy KPMG.
“In H1’21, a significant amount of institutional money flowed into the crypto space, highlighting the broadening of the investor base,” the firm said.
According to them, investor awareness and knowledge of the industry is also rising, as investors now show a much better understanding not only of cryptoassets, but also the operational and procedural side of them.
Total global investment activity (VC, PE and M&A) in blockchain & crypto 2018–2021*
Source: Pulse of Fintech H1’21, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook), *as of 30 June 2021.
Venture capital firms are also rapidly expanding their exposure to crypto and blockchain, as a number of industry players managed to raise at least USD 100m in funding rounds from such investors. These included cryptoasset-backed lender BlockFi (USD 350m), blockchain infrastructure platform Paxos (USD 300m), Blockchain.com (USD 300m), and Mexican crypto exchange Bitso (USD 250m), the report said.
Meanwhile, as reported, major crypto derivatives exchange FTX closed USD 900m Series B fundraise, with over 60 investors valuing the company at USD 18bn.
Other major market trends observed in the first half of 2021 were related to China’s continued efforts to advance the testing of its central bank digital currency (CBDC), the spike in interest in non-fungible tokens (NFTs), and the increasing regulatory attention drawn by crypto from regulatory bodies across the world.
Commenting on China’s CBDC project, Laszlo Peter, Head of Blockchain Services for Asia Pacific at KPMG Australia, said that Beijing “could create a real alternative to the supremacy of the US dollar over time.”
“While the digital currency initiative is relatively small scale now — still in the testing phase — it has a lot of potential. With countries from areas such as Africa and Southeast Asia signing trade agreements with China and potentially accepting the digital yuan as a mode of clearing trade, it could gain traction quickly,” he said. “It’s going to be a critical area to watch over the next years.”
KPMG said that some of the developments to closely watch in the second half of this year include: the continued maturation of the cryptosphere; an intensifying separation between cryptoassets and the use of blockchain; further focus on regulatory frameworks, in particular in India which could move to regulate crypto as an asset class in the second half of this year; and the evolution of exchanges focused on areas such as NFTs.
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