In the first half of 2022, venture capital firms put $14.2 billion into cryptocurrency through 725 deals. However, KPMG, one of the Big Four accounting firms, thinks that investments will likely slow down for the rest of the year.
According to a new KPMG report released on September 6, the biggest investments in the first half of 2022 came from the German crypto trading platform Trade Republic ($1.1 billion), the digital asset custody platform Fireblocks ($550 million), the crypto exchange FTX ($500 million), and the Ethereum software company ConsenSys ($450 million).
Anton Ruddenklau, who is the Global Leader of Fintech at KPMG, was one of the report’s authors. He pointed out that investments in the first half of 2022 alone were already more than double those in all years before 2021. This “highlights the growing maturity of the space and the variety of technologies and solutions that are attracting investment,” he said.
Related: Who Now Gets the Most From Crypto Venture Capital?
Ruddenklau, on the other hand, said that investment would drop this year because too much money was put in during the record-setting years of 2021 and the first half of 2022. He also said that a possible recession, rising inflation and interest rates, and the conflict between Russia and Ukraine would also cause investment to drop.
total investment (VC, PE, and M&A) in blockchain and cryptocurrencies around the world. From: KPMG.
According to Cointelegraph Research, KPMG’s prediction of a drop in crypto investments seems to have already come true. In July, monthly inflows into the blockchain venture capital market fell by 43%.
Ruddenklau thinks that retail companies that sell coins, tokens, and non-fungible tokens (NFTs) will notice the drop in interest and investment in cryptocurrencies the most.
Alexandre Stachtchenko, the KPMG France Director of Blockchain & Crypto Assets, said in the report that “well-managed crypto companies with healthy risk management policies, a long-term vision, and a strong cost and risk management approach” will be best able to survive the current bear market.
“Of course, some cryptocurrencies will go away, especially those whose value propositions aren’t clear and strong. From an ecosystem’s point of view, that could be a good thing because it would clean up some of the mess that was made during a bull market. “The companies that do best will be the ones that stay in business.”
Related: The venture capital arm of Binance raises $500 million to invest in Web3 blockchain technology.
Stachtchenko also said that banks are becoming more interested in blockchain infrastructure solutions and stablecoins so they can use the operational benefits of distributed ledger technology.
KPMG also thinks that more money will be put into developing fintech markets, especially in Africa.
Binance, a cryptocurrency exchange, has been working on this front. It recently started early-stage talks with the Nigerian government to build a cryptocurrency-friendly economic zone. The goal is to create long-term economic growth through digital innovation.