According to a report published by KMPG, one of the world’s leading tax advisory service firm, the investments made in the industry of blockchain in 2018 outshined the overall investments made in 2017.
In the report the spending made by different businesses across the world in blockchain are summed up and clear indications of a major upticks in the first two quarters of 2018 are shown. It is also suggested that as more and more investments were made, the majority of the investors were inclined more towards the big and mature companies in the game of blockchain. The new entries and startups in the market of blockchain were still not favored by major investors. As the report states:
Investor interest in blockchain was not limited to one jurisdiction. Good sized funding rounds were seen during the first half of the year, including $100 million+ rounds to R3 and Circle Internet Finance in the US and $77 million to Ledger in France. The US was particularly active on the blockchain front, with total investment in the first half of the year already exceeding the total seen in 2017.
2018 also saw an increase in the variety and type of investors interested in the world of blockchain. Besides central banks, major corporates have also stepped into the game of investing in this industry.
It is concluded in the report that following the increased interest in market of cryptocurrency and fintech, the diversity of the investors actively involved in the market increased quite considerably in 2018.
The growing maturity of the fintech sector has led to an increase in the diversity of investors, including more active participation by corporates outside of the big banks and largest insurance companies. Globally, we are starting to see more mid-tier banks — in addition to insurance and wealth management companies — have recognized the need to embrace fintech and are making investments either directly or through participation in accelerators, incubators or innovation consortia.
Despite all the illegal activities that have been percolating around the crypto space, the mood of investors about putting their investments in the blockchain market has not swayed at all. Although the credibility of the crypto market has been tinted by the fraudulent and manipulative practices, the inflow of investments did not seem to be affected at all. In the recent disapproval of the proposal posed in front the United States Securities and Exchange Commission (SEC) by Winklevoss twins, it is clearly stated that the commission is disapproving the establishment of a bitcoin exchange traded-fund owing to all the illegal practices that have been circulating around the cryptocurrency world. In the disapproval put forward by the SEC to the proposal backed by Bats BZX that:
Although the Commission is disapproving this proposed rule change, the Commission emphasizes that its disapproval does not rest on an evaluation of whether bitcoin or blockchain technology more generally has utility or value as an innovation or an investment. Rather, the Commission is disapproving this proposed rule change because as discussed in detail below, BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that its rules be designed to prevent fraudulent and manipulative acts and practices.
Despite the rise of all the illegal activities on the blockchain-based cryptocurrency network, the cash inflow was increased in the blockchain technology sector. We have seen that in the recent past that blockchain has been spreading around the globe with incorporation in many industries. The innovative value that adds cannot be denied in any case. Besides showing the tendency for usage in illegal activities, the transparent and anonymous framework that it provides can provide a lot of benefits.
Talking about blockchain, Russel Guthrie, the chief financial officer of the International Federation of Accountants (IFAC) stated that:
New technologies, such as blockchain and artificial intelligence are advancing the global profession, raising the bar and driving demand for new workforce skills and competencies.
U.S. Financial Services lead for technology and innovation at KMPG, Bill Cline has stated that:
Blockchain represents not only a dramatic shift in how financial services organizations will manage transactions in the future, but also how they structure their internal operations going forward.
And also, as stated by Marcel Stalder, the CEO of EY Switzerland:
It is important to us that everybody gets on board and prepares themselves for the revolution set to take place in the business world through blockchains, smart contracts and digital currencies.
The investments made in the sector of fintech were greater in Asia as compared to the United States, but in specific regards to the blockchain technology, U.S. invested more than Asia overall. With more and more incorporation of the blockchain technology in industry, the investments in this sector are expected to increase even further.