The report of KPMG, one of the Big 4 in the audit sector, shows that despite the decline of the cryptocurrency market, venture capital funds are still pouring money steadily into this sector.
According to a new KPMG report published on Tuesday, venture capital firms (VCs) poured $14.2 billion into cryptocurrencies through 725 transactions in the first half of 2022. The largest comes from Germany-based crypto trading platform Trade Republic ($1.1 billion), digital asset custody platform Fireblocks ($550 million), cryptocurrency exchanges FTX ($500 million) and Ethereum software company ConsenSys ($450 million).
KPMG’s global head of fintech, Anton Ruddenklau, noted that investment figures for the first half of 2022 alone have more than doubled compared to all years prior to 2021. This shows rapid maturity of blockchain technology and the cryptocurrency market. Thereby attracting strong financial resources from investors.
However, according to KPMG’s forecast, investments are likely to slow down for the rest of the year. Mr. Ruddenklau said that overinvestment in the record period of 2021 and the first half of 2022, coupled with a potential recession, rising inflation, interest rates and the Russia-Ukraine conflict, will cause investment to fall in the second half of the year. remaining this year.
KPMG’s prediction for a crypto investment downturn is based on crazy money market data from July. A study by Cointelegraph Research indicates that monthly inflows into the blockchain venture capital market have decreased by 43%. in July 2022.
Ruddenklau believes that the cooling interest in investing in the crypto sector can be especially felt in retail companies offering digital assets, crypto, NFTs.
Alexandre Stachtchenko, blockchain & crypto-assets director of KPMG France, stated in the report that well-regulated crypto companies with sound risk management policies and a long-term vision will continue to stand. Solid financing coupled with prudent market approaches will position themselves in a market that is on the verge of falling.
“Of course, some cryptocurrencies will die – especially those that don’t have a clear value proposition and offer practical benefits. This is actually quite sane from an ecosystem standpoint as it would clear up some of the mess created during the euphoria of a bull market. The best companies will be the ones that last.”
Stachtchenko added that financial institutions are increasingly interested in blockchain and stablecoin infrastructure solutions to take advantage of the operating advantages of distributed ledger technology.
KPMG also expects further investment efforts in underdeveloped fintech markets, particularly in Africa. Efforts have been made by cryptocurrency exchange Binance. They recently entered into early-stage negotiations with the Nigerian government to build a crypto-friendly economic zone with the aim of generating long-term economic growth through digital innovation.
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