According to the September 2022 KPMG’s “Pulse of Fintech H1 2022” report, the total global investment in blockchain and cryptocurrency was US$32.1 billion in 2021. The KPMG report noted that crypto-focused companies attracted US$14.2 billion during H1 2022.
Although the H1 2022 investment in blockchain and cryptocurrency is higher than the full-year investments for 2019 (US$5.3 billion) and 2020 (US$5.7 billion), the reports projects a slowdown in crypto interest and investment in H2 2022, mainly from retail firms offering coins, tokens and NFTs.
According to the KPMG report, in H1 2022, the regulator’s focus remained high on protecting consumers. In addition, the report also revealed that in H1 2022, institutional and corporate investors in H1 2022 accounted for the larger share of crypto investment compared to retail consumers.
The KPMG report called for further caution in the crypto markets in H2 2022. “Looking ahead, we are going to see some cryptos cutting their valuations and working to raise money because it’s their only option. They’d rather raise money and be capitalized at a lower valuation rather than not doing so and taking the risk of dying out. Of course, some cryptos will die out — particularly those that don’t have clear and strong value propositions. That could actually be quite healthy from an ecosystem point of view because it’ll clear away some of the mess that was created in the euphoria of a bull market. The best companies will be the ones that survive”, said Alexandre Stachtchenko, Director blockchain & crypto assets- KPMG France.
The report further noted that in H1 2022, the global fintech market was affected by the war in Ukraine, the ongoing supply chain challenges, and rising inflation and interest rates. The crypto market segment was also adversely affected in H1 2022. The global crypto market cap fell by over 50% since the start of this year, and several crypto companies collapsed.
According to the KPMG report, challenges remain for the rest of this year. Anton Ruddenklau, Global Leader of Fintech, Partner and Head of Financial Services Advisory, KPMG in Singapore, said: “Heading into the second half of 2022, market challenges are expected to continue, with investors increasingly focusing on top-line revenue growth, profitability, and cash flow”.
The KPMG report predicts that the investment focus for the crypto segment in H2 2022 will be on improving infrastructure and the use of blockchain in financial market modernization. As per the report, H2 2022 is also expected to create innovative partnerships to address crypto Environmental, Social, and Governance (ESG) concerns.