As cryptocurrencies and risk dollars flood the digital asset landscape, what will the industry do for an Encore 2022? – News from Crunchbase

While crypto certainly wasn’t new last year, it saw a 2021 record for newly minted unicorns and venture capital dollars invested in space.

Venture capital funding in the crypto space reached over $ 21 billion in 2021, far exceeding the $ 3.7 billion invested in 2020, according to figures from Crunchbase. This level of funding has also helped the birth of more than 30 new unicorns – companies valued at $ 1 billion or more – last year in the industry, around three-quarters of all unicorns created in crypto.

Those who follow the industry don’t expect a slowdown in 2022 as financial trading ecosystems continue to expand.

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“Crypto is one of the most exciting areas for investing right now because in some ways the entire stack is being built simultaneously,” said Nino Marakovic, CEO and partner of Sapphire companies, which has invested in several crypto companies such as FalconX and Tax. “From applications to infrastructure to protocols, we see activity from developers and contractors at all levels. “

In a space still as emerging as crypto, it can be difficult to spot the next new thing in 12 months – who had heard of DAOs around this time last year? regarding the future of venture capital investing in crypto.

Infrastructure and compliance

As in any growing industry, as crypto gains momentum, greater regulatory compliance is needed both to boost consumer confidence and to create a system of checks and balances for large corporations and institutions. who orchestrate it.

According to the figures of Coinbase, in the first quarter of 2018, 80% of crypto transactions were conducted by retail investors with a volume of $ 66 billion traded. Fast forward to the first quarter of last year, which saw 72 percent of all transactions linked to large institutional participants, and traded volume reaching $ 327 billion.

When the numbers start to get this big and you start dealing with these types of financial institutions, a more vigilant eye appears.

“Previously it was the rebels who drove this, now it’s big institutional players,” said Saad Siddiqui, director of Telstra companies which invests in crypto infrastructure.

Companies that help provide analysis of blockchain data and crypto transactions to institutions and governments like those based in New York City Channel analysis and based in Los Angeles Block daemon, which helps manage payment nodes and rails, will likely continue to attract investor interest as compliance protocols are built around crypto.

“Anything that helps fuel the infrastructure that surrounds crypto transactions,” Siddiqui said.


The other adjacent area that large institutions now dealing with crypto can look at are analytics platforms that help provide correlations between crypto and its performance with more traditional asset classes, said. Jordan Nof, co-founder and managing partner of Tusk Venture Partners, where he invests in crypto companies.

“I think you will see different applications that will give you an analytical perspective on your level of diversification as an investor,” he said. “I’m sure it’s already on the roadmap for some of the bigger companies. “

While crypto hedge funds and insurance companies already have in-house tools with similar capabilities, these analyzes could come from companies more in the crypto space or even startups.

Siddiqui said that a company like FTX– which is part of the Telstra Ventures portfolio – could possibly enter this field and others could also develop “Bloomberg-type” analyzes.

Finally more clarity?

Of course, further investment in crypto depends on one thing: clearer regulation.

In the past year, uncertainty has sometimes hung over the industry, with China making crypto transactions illegal and new government regulations in the United States. Despite these clouds, more institutional investors and traditional venture capitalists have entered the space at breakneck speed.

Investors predict that 2022 could be the year that regulations will be made clearer, not only in the United States but around the world, as more and more people seek to transact in crypto.

“I think you will see more clarity across the world,” said Matt zhang, which recently announced the launch of Beehive Spirit, a $ 1.5 billion fund focused on investing in crypto infrastructure, blockchain protocols and virtual worlds.

“I think the regulations are sound,” he said. “Clarity is the key. You just can’t let people guess what’s going to happen next. “

Yash Patel, a general partner of Telstra companies who invests in crypto on the consumer side, agreed that more clarity could come from bodies such as the Security and Trade Commission This year. He added that crypto companies like FTX do a lot of education and awareness raising and that it will be up to those in the space to work with government agencies to find smart solutions to industry regulations.

“I think you need to take a very thoughtful approach to this,” he said.

Drawing: Dom guzman

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