DeFi
2022 was a turbulent year for the crypto space, to say the least; from an ongoing bear market and crash for LUNA to the downfall of FTX one of the industry’s most prominent players. Despite the setbacks, VC investors continued to show support for crypto startups.
According to a new study released by European investment firmRockawayX, VC investment in crypto startups based in Europe reached its all-time high in 2022 with $5.7 billion invested
European DeFi startups hit $1.2 billion in 2022, which is a 120% increase from the previous year’s investments of $534 million
Viktor Fischer, the CEO of RockawayX, pointed out that the crypto market is cyclical and during the 2018 winter, “the total digital asset market cap fell by 80%, but startup funding activity held steady.”
“Investments made when digital asset prices were depressed materialized in tech and usage traction alongside ‘bull market’ price recoveries.”
Europe is also home to the highest number of crypto startups (3,977), according to the headquarters location.
However, it begins to fall behind the United States regarding the number of startups backed by VC investors, those with over a million dollars in funding and unicorns.
Cumulative number of crypto startups by HQ location. Source: RockwayX
Top global investors in European startups include Animoca Brands, Coinbase, Blockchain Capital and the Digital Currency Group.
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In Europe, investment in startups which provide financial services made up more than half (52%) of all investments, with infrastructure and Web3 making up 32% and 16% respectively.
Crypto VC investment by sector in Europe (2022). Source: RockawayX
However, when compared with the year prior investment in financial service-based startups declined by 19% and infrastructure grew by 24%.
Europe’s growing prominence as a crypto-friendly region comes as regulators in the European Union finalize their highly-awaited MiCA regulations.
The final result of the regulations have been postponed two times by the EU, both times due to translation issues. Regulations passed in the EU must be translated into all 24 languages of the member states.
At the time of writing, the release of the MiCA rules are anticipated to be released in April 2023.
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