Despite the current crypto bear market, digital currency and blockchain technology still remains a global hot property and a large portion of this new sector’s investment capital is coming from Asia and tech startups, in both the US and China, are benefiting from the resultant financial outflow.
A number of Asian funds have been involved in early stage crypto investing in the US, according to a report by TechCrunch, and these funds will now be hoping for strong future performances as blockchain becomes a more mainstream and integral part of technological developments.
While Silicon Valley has been the recipient of investments from China for many years, these have traditionally been smaller in size than US-based funding. In recent years, however, this trend has been changing as investment opportunities grow alongside the emerging technologies.
Statistics by the Wall Street Journal indicate that Asian investors directed 40% of the record $US154 billion in global venture financing, versus their American counterparts with 44%. Deals led by venture capitalist firms including Sequoia Capital and Andreessen Horowitz attributed for $67 billion, while Asian-backed investment companies such as Tencent and SoftBank accounted for $61 billion. Ten years ago Asia’s share was less than 5%.
Additionally there have been huge tech investment opportunities in the Far East. According to a study by China’s Ministry of Science and Technology affiliate and a Beijing-based consultancy, the 2017 China Unicorn Enterprise Development Report, there were 164 unicorns in China, worth a combined $628.4 billion, and 132 unicorns from the US for 2017. A unicorn refers to a startup valued at more than one billion dollars.
Following China’s heavy handed crackdown on all things crypto-related, cross border activity has increased. China dominates crypto mining with an estimated 80% of the market share, while the Asian region, South Korea and Japan primarily, dominates crypto-currency trading. According to analytics website CoinMarketCap, four of the five largest exchanges by trade volume are located in Asia and run by Chinese or Korean teams.
Asia is also already ahead of the US in the crypto industry due to more favorable regulations. Blockchain startups in the region therefore already have the edge over their US counterparts, who face heavy regulatory roadblocks. However, crackdowns on initial coin offerings in China have driven local firms overseas to seek crypto-friendlier climes.
While investment in both the US and Asia continues to climb, the world is still waiting for the regulatory clarity that could enable this embryonic industry to really take off in the mainstream.