Cryptocurrency and blockchain technologies investments in the first half of 2021 stood at $8.7 billion, surpassing the total yearly investments in this space from the previous three years, according to a KPMG report released on Thursday (August 12).
This figure compares with whole-year totals of $7.2 billion, $5 billion and $4.3 billion for 2018, 2019 and 2020, respectively. The report, titled Pulse of Fintech, also stated that the total was reached from a smaller number of deals than previously, pointing to a greater average value for individual transactions.
This implies that the market is evolving, with more institutional money flowing as investors now are having a much better understanding not only about crypto assets, but also the operational and procedural side of crypto.
VC investment was very strong as numerous companies raised $100 million+ funding rounds, including BlockFi ($350 million), Paxos ($300 million), Blockchain.com ($300 million) and Bitso ($250 million).
(Source: KPMG Pulse of Fintech)
Meanwhile, cryptocurrencies continued to be a critical focus for some regulators, with widespread differences between jurisdictions as to acceptance and use. During H1’21, China banned financial institutions and payments companies from providing cryptocurrency related services, while El Salvador announced that Bitcoin would become legal tender in the country as of September 7, 2021, the report added.
However, the world's second largest economy is continuing to lead the Cental Bank Digital Currency drive, as it moves forward with testing of the digital yuan, or e-CNY.
The expanded its pilot project to include salary payments for some workers in China’s Xiong’an New Area, the payment of subway fares and the exchange of digital and physical currencies at two banks in Beijing
Looking ahead, the bi-annual report on fintech investment trends expects continued maturation of the cryptocurrency space, further focus on regulatory frameworks and evolution of exchanges focused on areas such as non-fungible tokens (NFTs) which gain more traction, with interest in a whole range of new types of assets, ranging from professional real estate to more fragile assets which can be tokenized or fractionalized .
“Digital currencies and virtual assets are a big, big topic of conversation. I think for the rest of this year at least, crypto will be a very hot ticket for investors” Anton Ruddenklau Global Fintech Co-Leader, Partner and Head of Financial Services Advisory, KPMG in Singapore said.
“We’ll likely see this trend continue, with focus stretching across the crypto ecosystem — from cryptocurrencies and trading platforms to NFTs, alternative asset trading, and support structures. The space will also see a more diverse range of investors considering investments in the space” the report predicts.