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Crypto Startup Investors Bypass Asia, Focus on US | PYMNTS.com


China’s crackdown on technology companies and cryptocurrencies has venture capitalists looking to back companies in the U.S. instead of Asia, a scenario that hasn’t happened since 2017, Bloomberg reported Wednesday (Dec. 1).

“We’ve basically seen no deals in China,” CB Insights analyst Chris Bendsten told Bloomberg. “In Asia, the companies are really based in Hong Kong, India and Singapore.”

Although China was once considered a crypto nerve center, the tech crackdown has negatively affected cryptocurrency and blockchain startups looking for capital, according to data from CB Insights. Beijing pulled the plug on crypto mining and banking operations several months ago, and then went on to declare all crypto transactions illegal in September.

See also: China Declares All Cryptocurrency, Related Transactions Illegal

While China’s crypto startup culture has been evaporating, investors worldwide have had their checkbooks out, with the fourth quarter of this year already on track to be the largest yet for putting money into crypto startups, according to the report.

Venture investing in the space escalated worldwide from $3.1 billion in 2020 to $21.3 billion through Nov. 30. However, new deals in China dropped off by over 50% from last year, with a total of just 41 in 2021.

Funding to crypto and blockchain startups dropped to $214 million, down roughly one-third — whereas in the U.S., investments in the space surged to $10.9 billion, up sevenfold, Bloomberg reported.

Read more: China’s Big Tech Crackdown Could Chill Innovation

The investment appetite worldwide is a sign that the cryptocurrency and blockchain space is gaining a mainstream foothold, Bendsten told the news outlet. Venture capital, private equity, and corporate venture capital investors are “all believers now” and the trend is anticipated to stay the course in 2022, he added.

Amy Wu, a partner at Lightspeed Venture Partners, told Bloomberg that the company is focused on becoming experts in the sector.

“In the next few years every partner at Lightspeed will become fluent in crypto,” Wu said. “It’s going to be the internet of our generation.”

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