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Blockchain remains a cryptic environment

2018 saw more private investments by count within the blockchain and cryptocurrency space than ever before. Last year started off slow but ultimately ended up with one mega-transaction boosting aggregate deal value. It also saw overall activity recover to the second-highest level observed this decade. The blockchain and cryptocurrency space is still nascent to the degree that commercialization potential and technical and regulatory hurdles are being tackled by multiple startups, helping boost overall volume. It remains to be seen how widely adopted the technology ultimately becomes, but investment is likely to remain robust going forward in pursuit of that goal and its ultimate efficacy.

Global private investment in blockchain and cryptocurrency

Number of blockchain deals drop significantly from 2018 high; investment still significant

Despite a drop in deals volume, blockchain continued to be a hot topic in most regions of the world. Facebook’s announcement of its Libra cryptocurrency raised a significant amount of discussion in June. The Libra announcement followed an announcement of a digital coin for payments by JPMorgan in February. The People’s Bank of China’s announcement of accelerated research and experimentation on digital currency and electronic payments has helped breathe new life into the space.

Blockchain continues to be a key investment area, and we’re really starting to see large corporates and governments get in on the action. One of the biggest blockchain announcements this year was the Chinese central bank’s announcement of the digital renminbi – a fully collateralized, blockchain-powered digital token to support the ‘One Belt One Road’ initiative. Over the next year or two, other countries, particularly in emerging markets, will likely also look at issuing their own digital currencies.

Laszlo Peter
Head of Blockchain Services, Asia Pacific,
KPMG Australia

Blockchain interest was not limited to coin announcements. Late in 2019, blockchain-based cryptocurrency trading platform AliExchange was acquired by FoPay for $2.1 billion. Distributed ledger technologies related to the improvement of business processes also started to mature in areas like supply chain management and trade financing.

Blockchain continues to hold significant transformative potential. As it matures, its applicability will widen, with applicability ranging broadly from shelf-life management of goods to audit processes and regulatory reporting. Given this potential, investment in the blockchain space is expected to remain robust well into 2020. 

Fintech subsector insights and regional trends