Home Blockchain Private equity investments in blockchain, cryptocurrency in decline

Private equity investments in blockchain, cryptocurrency in decline

Private equity investments in blockchain, cryptocurrency in decline

Rapidly falling cryptocurrency prices, looming industry-specific regulation, and macroeconomic headwinds are weighing on global private equity and venture capital investments in blockchain and cryptocurrency.

The aggregate value of global transactions across the two assets fell 48.1% quarter-on-quarter in the three months to June 30, to a combined total of $2.7 billion, according to data from S&P Global Market. Intelligence.

A solid $16.65 billion was invested in these assets in 2021, of which $960 million was committed to cryptocurrency.

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The ambiguity the regulation of digital currencies by central banks, the cost of the electricity consumed to run cryptocurrency mining farms and the ever-increasing carbon footprint are among the factors hindering cryptocurrency investment.

The company’s interest in [blockchain-powered applications]however, remains strong, said Alex Johnston, research analyst at 451 Research.

“Companies consider applying [blockchain] technology in areas such as supply chain tracking, digital identity and B2B payments. As this market gains momentum, it could mitigate the challenges of losing trust in the consumer space,” Johnston said.

Wider adoption will largely depend on regulators, he said.

“Blockchain providers and potential investors seek transparency, but where we see legislation, such as the EU European Securities and Markets Authority Act, the focus is on blockchain as an enabler. of speculative assets, rather than on regulation of broader applicability.”

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Biggest PE/VC investments in 2022 in blockchain and cryptocurrency

New York-based blockchain technology company ConsenSys Software Inc. completed the largest funding round in 2022 to date, raising $450 million. Returning investor ParaFi Capital LLC led the round, while Temasek Holdings, True Capital Management LLC and Anthos Capital LP were among other participants.

Australian company Animoca Brands Corp. Ltd., which provides gamification, blockchain and artificial intelligence technologies for mobile products, raised $409.9 million. Investors included 10T Holdings LLC, Alpha Wave Global LP and Sequoia China Investment Management LLP.

Cryptocurrency exchanges FTX Trading Ltd. and West Realm Shires Services Inc. raised $400 million each in separate funding rounds backed by private equity firms.

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