Report: KPMG Shares H2’22 Crypto Investment Trends

A KPMG report showing the direction of the Fintech market highlights the changes in investments, losses and profits in the first half of 2022. An important aspect noted is the drastic changes that the cryptocurrency industry and the blockchain.

It is clear that with the impact of the bear market, money and investments are changing direction in the industry, but in which direction are they heading?

According to reportinvestments in the blockchain and cryptocurrency market have declined for $14.2 billion in S1’22 from 2021. Some of the reasons for the drop included the Russian-Ukrainian War, inflation, and the collapse of Terra.

Terra’s collapse was one of many incidents that greatly affected the industry. Others include protocol violations and the added impact of the Terra-UST crash which resulted in the loss of billions of dollars.

Before 2018, “most crypto investments came from retail consumers” according to KPMG but companies are taking center stage as they account for “a much larger share of investment”.

Countries and regions have also started taking steps to regulate their cryptocurrencies with El Salvador and the Central African Republic make legal bitcoin offers for their respective nations. The EU was not left as they “agreed to new regulations for the cryptocurrency industry,” in the first half of 22.

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Stablecoins, blockchain solutions and compliance

Despite the threats in the crypto market, the industry appears to be maturing. The change in investment direction is one of the reasons for this assertion.

Top VCs like Trade Republic, Fireblocks, FTX and ConsenSys have invested $1.1 billion, $550 million, $500 millionand $450 million respectively in this same “bear” market in 2022. And the majority of these funds are focused on infrastructure.

As investments in cryptocurrencies decline, “there will likely be a continued focus on using blockchain in modernizing financial markets.” Therefore, “money” is diverted to creating real solutions around blockchain technology.

For the remainder of 2022, the KPMG team foresees these trends:

  • More financial testing with multiple crypto businesses shutting down and fewer survivors.
  • Launch of products focusing on “compliance and traceability of crypto transactions”.
  • Increased interest in stablecoins.
  • Partnerships to address ESG challenges.

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