Venture capital firms have invested $14.2 billion in crypto in the first half of 2022 in 725 deals, but Big Four accounting firm KPMG predicts that investments may be delayed for the rest of the year.
According to a newly released KPMG report on September 6, the biggest investments in H1 2022 came from Germany-based crypto trading platform Trade Republic ($1.1 billion), digital asset protection platform Fireblocks ($550 million), crypto exchange FTX ($500 million). , and Ethereum software company ConsenSys ($450 million).
The report’s authors, including KPMG’s global fintech leader Anton Rudenclaw, noted that investment figures for the first half of 2022 were more than double all years prior to 2021. Technologies and solutions that attract investment.
However, Rudenclaw said that overinvestment in 2021 and the first half of 2022, a looming recession, rising inflation, interest rates and the Russia-Ukraine conflict will lead to a reduction in investment this year.
KPMG’s forecast for a fall in crypto investment appears to be borne out by data from July, with monthly inflows into the blockchain venture capital market falling by 43% month-on-month, according to Cointelegraph research.
Ruddenklau expects the slowdown in crypto demand and investment to be felt particularly by retail firms that offer coins, tokens and NFTs.
“Well-managed crypto companies with sound risk management policies, a long-term perspective and a strong cost and risk management approach” are best positioned to survive the current situation, Alexander Stachchenko, KPMG’s France director of blockchain and crypto assets, said in the report. Bear market.
“Of course some cryptocurrencies will die – especially those without clear and solid value. That can actually be ecologically sound because it removes some of the chaos that has been created in bull market euphoria. The best companies will survive.
Stachchenko added that financial institutions are increasingly interested in using blockchain infrastructure solutions and the practical benefits of distributed ledger technology.
Related: Venture Capital Finance: A Beginner’s Guide to VC Funding in the Crypto Space
KPMG expects further investment efforts in underdeveloped fintech markets, particularly in Africa.
Efforts on this front have been made with the crypto exchange Binance recently holding preliminary talks with the Nigerian government with plans to create long-term economic growth through digital innovation.