Venture capital (VC) firms poured US$14.2 billion into cryptocurrency assets, via 725 deals, in the first half of this year, more than double the total from any previous year.
KPMG, which released the report, said it underscored the growing acceptance of the sector, although it expects interest to slow this semester due to a looming recession, 40-year high inflation, rising interest rates and the ongoing war in Ukraine.
Anton Ruddenklau, global fintech leader at KPMG, said the entries “highlight the growing maturity of the space and the breadth of technologies and solutions attracting investment.”
Most crypto investments before 2018 came from retail consumers, he noted.
“Since then, the profile of investors has changed, with institutional and corporate investors now accounting for a much larger share of investments.”
Investments for the first half have more than doubled every year except for the last – US$5.7 billion in 2020 and US$5.3 billion in 2019, although KPMG believes this is unlikely that inflows exceed the record of US$32.1 billion seen in 2021 when there was a ‘crypto summer.’
The biggest deals in the space came from venture capital raises, with a $1.1 billion raise by Germany-based crypto trading platform Trade Republic being the largest.
About a quarter of the funds raised came from the Ontario Teachers’ Pension Plan Board, indicating the growing weight of cryptos in pension funds.
Alexandre Stachchenko, Director of Blockchain and Crypto Assets at KPMG France, said: “Well-run crypto companies with sound risk management policies, a long-term view and a strong cost and risk management approach will likely do well,” even with cryptocurrency prices currently falling in what is now being described as a “crypto winter.”
“Of course, some cryptos will die out, especially those that don’t have clear and solid value propositions.
“It could actually be quite healthy from an ecosystem perspective, as it will take away some of the mess created in the euphoria of a bull market.”