Crypto funding shifting from US to China

Go East: Crypto funding shifting from US to China, report says

In 2015, just 2% of cryptocurrency and blockchain deals were for Chinese companies. Fast forward four years to 2019, and the figure soared to 22%

Funding for crypto and blockchain projects is shifting from West to East—with capital flowing out of the US and into China, according to CBInsights.

The Blockchain Report 2020 said 51% of deals in this industry were for US-based companies four years ago, while only 2% was earmarked for Chinese businesses.

According to the latest figures, China’s share of deals is 22% in 2019, while America’s share dwindled to just 31%. 

That’s 20% more for China and 20% less for the U.S since 2015. And that is largely before President Xi Jinping called for China to lead the world in developing blockchain technology in October 2019.

The report also illustrates how investments differ based on the country. Some of the biggest investments in China over recent years have been in the likes of Bitmain, Hyperchain, and Canaan—indicating that mining giants are particularly popular.

Contrast this with some of the biggest investments seen in the United States. Payment protocols such as Ripple, alongside trading platforms like Coinbase and tZERO, have been notable beneficiaries of funding rounds between 2015 and 2019.

The biggest funding deals in 2019

Ripple topped the list of the funds raised in 2019, generating $200 million in capital from the likes of Route 66 Ventures, SBI Group and Tetragon Financial Group.

That’s streets ahead of the other biggest deals last year. Figure Technologies, a fintech company that focuses on using blockchain to deliver mortgage products, was in second place after raising $103 million in November.

Proxicoin, an Ethereum-based securities token that delivers fractionalized content in film, television and music, raised $100 million in May 2019. Collectively, these are the only three firms which managed to raise nine figures in a single deal last year.

As reported by Modern Consensus, the CBInsights report also revealed that the total amount of funding dollars devoted to crypto and blockchain projects plunged by 30% last year.

China steps up

The shifting investment picture comes as Beijing continues to add the final touches to the design of its yuan-backed digital currency. China has been racing to be one of the first countries in the world to issue a central bank digital currency—something that the US hasn’t been pursuing with anywhere near as much urgency.

U.S. Treasury Secretary Steven Mnuchin has said that he does not expect a digital dollar to be issued before 2025. Critics have warned that this could put America at a significant disadvantage—and put the dollar’s status as the world’s reserve currency at risk.

Editor’s Note: Modern Consensus founder Ken Kurson sits on the board of Ripple.

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Connor Sephton is a journalist with an interest in cryptocurrencies, personal finance, and financial inclusion—as well as the challenges the crypto industry faces in achieving mainstream adoption. He owns cryptocurrencies.