KPMG Pulse Fintech blockchain 2019
Cryptocurrencies

KPMG: Fintech boom but blockchain bust in 2019

Despite 30% fewer deals than 2018, the auditing and advisory firm predicts blockchain will ‘remain robust well into 2020’

Despite an overall blockbuster year for Fintech, 2019 saw a blockchain bust, with investment falling substantially according to a new report from audit and advisory giant KPMG.

KPMG’s Laszlo Peter is bullish on blockchain (Photo: KPMG)

Global private investment in blockchain technology and cryptocurrency dropped from $6.3 billion in 2018 to just $4.7 billion last year, according to KPMG’s “Pulse of Fintech” report for the second half of 2019. 

And even that number was skewed by one “mega-transaction,” the $2.1 billion acquisition of AliExchange by FoPay, it found.

The number of deals dropped from 676 to 479 last year, although that’s still far above 2017’s 281 deals. The report looked at venture capital, private equity, and mergers and acquisitions.

Technical and regulatory hurdles were a problem, although one being tackled by many startups, it said. 

The broader Fintech market saw $137.5 billion invested across nearly 2,700 deals. More than half—$77.1 Billion—came in an enormous Q3, according to the “Pulse of Fintech.”

Still bullish on blockchain

Despite all that, KPMG remains very bullish on blockchain heading into 2020, according to Laszlo Peter, head of blockchain services, Asia Pacific, for KPMG Australia.

“Blockchain continues to be a key investment area, and we’re really starting to see large corporates and governments get in on the action,” Peter said in the report. 

Libra on mobile phone and bitcoins

A pair of stablecoin initiatives, Facebook’s Libra and JPMorgan’s JPM Coin, were called transformative moments.

Peter also highlighted China’s announcement of plans for a digital yuan renminbi, “a fully collateralized, blockchain-powered” central bank digital currency to support China’s ‘One Belt One Road’ initiative. It was “one of the biggest blockchain announcements this year,” he added.

That and Libra “helped breathe new life into the space,” said KPMG.

“Over the next year or two, other countries, particularly in emerging markets, will likely also look at issuing their own digital currencies,” Peter predicted.

The report ended on an upbeat note, saying “[b]lockchain continues to hold significant transformative potential.”

As blockchain technology “matures, its applicability will widen, with applicability ranging broadly from shelf-life management of goods to audit processes and regulatory reporting,” KPMG said. “Given this potential, investment in the blockchain space is expected to remain robust well into 2020.”

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Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.